ZGEN – ZymoGenetics, Inc. – Shares of the biotechnology firm engaged in developing therapeutic proteins to combat life-threatening illnesses jumped 84.7% to touch an intraday- and new 52-week high of $9.79 in the first half of the trading session after Bristol-Myers Squibb agreed to acquire the company for $885 million, or $9.75 per share in cash. Investors expecting ZymoGenetics’ shares to rally higher by November expiration purchased approximately 1,400 calls at the November $10 strike for an average premium of $0.10 each. Call buyers make money if the Seattle-based company’s shares increase 3.2% over today’s high of $9.79 to surpass the effective breakeven price of $10.10 by expiration day. The overall reading of options implied volatility on ZGEN came crashing down, falling 68% to 16.37%, following news of the buyout by Bristol-Myers Squibb.
Affiliation: Interactive Brokers
Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
Interactive Brokers: Interactive Brokers offers direct market access to around 80 electronic global markets from a single account. Successful traders and investors understand that superior technology and lower trading costs can result in greater returns. For 32 years we have been building direct access trading technology that delivers real advantages to professionals worldwide. With consolidated equity capital of US $4.4 billion, IB and its affiliates exceed 1,000,000 trades per day. In addition, our prudent and conservative risk policies make Interactive Brokers a safe haven for your money. Discover some of the reasons why IB, the largest independent US broker/dealer, is the professional traders' and investors' choice.
Visit: Interactive Brokers