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Vote of confidence for Astex Pharma

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Astex Pharmaceuticals rebounded strongly last week, and one trader apparently expects support levels to hold.

optionMONSTER's systems detected the sale of 3,000 October 4.50 puts at the same second on Friday, led by a block of 2,791 that went for $0.36. This is clearly a new position, as open interest in the strike was just 729 contracts before the trade appeared.

The put seller will keep the $0.36 as profit if ASTX stays above $4.50 through expiration in mid-October. If the stock is below that level, the trader will be on the hook to buy shares at an effective price of $4.14 when that credit is included. (See our Education section)

ASTX rose 2.69 percent to $5.34 on Friday. The drug developer hit a six-year high leading up to its first-quarter earnings report in late April but then fell sharply after the numbers were released. Shares continued to decline until hitting support at the $4 level in late June and have been climbing steadily since, rising back above its 50-day moving average last week.

Total option volume in the name topped 4,000 contracts on Friday, about 2.5 times its daily average for the last month.

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