Geron Corporation (GERN) is a biopharmaceutical company developing clinical stage treatments for myelofibrosis and similar disorders. Shares of GERN are rallying over 24% in today’s trading session on heavy option volume. Today’s move adds to strength we have seen in GERN this year as the stock is now up over 172% year to date. Options action would suggest even more upside in GERN as large block put sellers are coming into the market today. Earlier in today’s trading session a trader sold 15,000 GERN Nov 4 puts for $0.70. This is an extremely bullish order and adds to the already bullish options sentiment in GERN. We believe that this options activity confirms the move higher in GERN and signals as an opportunity for a covered call in GERN.
Trade: Buying 100 shares of GERN at $3.70 for every Nov 4 Call sold for $0.50
Reward: $80 per 1 lot
Breakeven: $3.20
Should shares of GERN close above $4.00 on November expiration this trade will return its maximum potential profit of $80 per 1 lot. The trade will also be profitable if stock is anywhere above $3.20. If the stock closes above $4.00 on expiration this trade will net an annualized return of 1,410.30%.
