Options Activity Alert: IMGN, DDD

DDD – 3D Systems Corporation – Shares in the maker of 3D printers are up sharply on Tuesday, rising as much as 6.7% to a record high of $70.49 during the first half of the trading session. The sharp move in the price of the underlying spurred activity in the Nov 08 ’13 expiry call options, perhaps has some traders position for DDD shares to continue pushing higher this week.

The Nov 08 ’13 $70 and $75 strike weekly calls attracted substantial volume, with more than 2,000 contracts having changed hands at each strike as of the time of this writing. It looks like traders purchased most of the $70 calls at an average premium of $0.96 each, and paid an average premium of $0.24 per contract for most of the $75 calls. Buyers of these out of the money weekly contracts stand ready to profit at expiration in the event that shares in 3D Systems rally another 3.2% and 6.7% over the current price of $68.75 to top average breakeven points at $70.96 and $75.24, respectively.

Overall options volume on DDD is approaching 35,000 contracts just before 11:30 a.m. in New York trading, which is approximately 145% of the stock’s average daily options volume of around 24,000 contracts. Trading in 3D calls is outpacing that of puts, with the call/put ratio hovering near 2.8 as of the time of this writing.

IMGN – ImmunoGen, Inc. – The biotechnology company’s shares dropped 22% to $12.88 today after the developer of anticancer therapeutics announced it will discontinue a Phase II study of IMGN901, its lead drug candidate. The stock was cut to ‘Sell’ from ‘Hold’ at Stifel Nicolaus today.

Options traders positioning for shares in the name to extend losses in the near term appear to be buying November expiry put options on the stock. The Nov $13 strike puts are the most traded contracts on IMGN thus far in the session, with upwards of 1,000 puts in play against open interest of 33 contracts. Time and sales data suggests most of the volume was purchased during morning trading for an average premium of $0.37 each. Put buyers may profit at expiration this month if shares in ImmunoGen drop 4.5% from the current price of $13.22 to settle below the average breakeven point at $12.63. Shares last traded below $12.63 in December of 2012.

About Caitlin Duffy 373 Articles

Affiliation: Interactive Brokers

Caitlin Duffy joined Interactive Brokers in 2009. In her role as Equity Options Analyst, Caitlin provides daily market commentary; highlighting various options trades, trading patterns and strategies of interest. Through Interactive Broker's webinar program, Ms. Duffy presents a number of educational, options-related events describing the theoretical pricing of options, the option Greeks as well as options strategies.

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