SIGA – SIGA Technologies, Inc. – Shares of the bio-defense company jumped 52.7% today to an all time high of $13.07 on reports the firm won a U.S. government contract worth up to $2.8 billion to supply its smallpox antiviral drug. The stock is currently up 42.75% at $12.22 heading into the close. Options traders initiated bullish stances on the stock right out of the gate this morning in order to position for continued appreciation in the price of SIGA’s shares. Investors picked up approximately 1,200 in-the-money calls at the October $12 strike for an average premium of $0.44 apiece, and are poised to profit should shares exceed $12.44 through expiration on Friday. Nearly 1,000 calls were purchased at the higher October $13 strike for an average premium of $0.20 each. Investors holding these contracts make money if SIGA’s shares rally another 8.00% over the current price of $12.22 to surpass the average breakeven point at $13.20 by October expiration. Optimism spread to the November $11 strike where another 1,135 in-the-money calls were coveted at an average premium of $1.35 per contract. These traders face an average breakeven share price of $12.35 and start to amass profits if the stock trades above this point through November expiration day. Another 840 in-the-money call options were picked up at the November $12 strike for an average premium of $0.75 a-pop. Finally, near-term bulls also looked to the October $11 strike to sell approximately 1,000 puts for an average premium of $0.16 each. Put sellers keep the full premium as long as the bio-defense firm’s shares exceed $11.00 through expiration in two days. SIGA Technologies’ overall reading of options implied volatility shrank 6.3% to 71.88% by 3:30 p.m. in New York. More than 16,980 option contracts have changed hands on the stock this afternoon versus total existing open interest of 19,707 lots. Calls were the clear favorite amongst investors populating SIGA options today. Traders exchanged more than 4.8 calls on the stock for each single put in play thus far in the session.
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.
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