ZGEN – ZymoGenetics, Inc. – Shares of the biotechnology company engaged in the development of therapeutic proteins to combat life-threatening illnesses are up 5.9% to stand at $4.32 as of 11:25 am ET. It looks like one options investor populating the November contract today expects ZymoGenetics’ shares to continue to improve in the next several months. The trader appears to have sold 1,500 in-the-money puts at the November $5.0 strike to take in premium of $1.05 per contract. The put seller walks away with the full premium in his wallet as long as ZGEN’s shares surge 15.75% over the current price of $4.32 to trade above $5.00 by expiration day in November. The biotechnology firm’s shares last exceeded $5.00 back on May 26, 2010. The sale of the put contracts implies the trader is willing to have shares of the underlying stock put to him at an effective price of $3.95 each if the puts are in-the-money at expiration.
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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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