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Late-day buyers snap up Rigel calls

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Last-minute buyers showed up yesterday afternoon to bet that Rigel Pharmaceuticals will reverse a long slump.

optionMONSTER's Heat Seeker system detected heavy buying in the September 5 calls in the final hour of yesterday's session, led by a print of 4,546 that went for $0.30. More than 5,500 contracts traded at the strike, double its previous open interest, clearly indicating that this is new activity.

The long calls lock in a $5 purchase price for the stock through mid-September no matter how far it might rise. But these contracts will expire worthless if shares remain below that level. (See our Education section)

RIGL rose 6.04 percent to finish yesterday's session at $4.04, just off its session high and the first close above its 50-day moving average since the beginning of April. The stock may be breaking out of a range that had been in place since the company gapped lower on June 4 on disappointing data regarding its rheumatoid arthritis drug, Fostamatinib. It was trading well above $10 last October.

Yesterday's call buying made up almost all of the 5,729 options that changed hands in RIGL, which has averaged a mere 86 contracts per day in the last month. Only 1 put traded in the name, a reflection of the bullish sentiment.

The company has not yet scheduled its second-quarter earnings results, but last year's calendar suggests that they will be announced next week.

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