Options Brief: ZymoGenetics (ZGEN)

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.

About Andrew Wilkinson 1023 Articles

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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