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Options Update: Genzyme Corp. (GENZ)

GENZ- Genzyme Corp.
Trash In Drugs Sends Genzyme Lower

A hot topic in the last few minutes has seen shares of biotech company Genzyme slide by 5% to $50.50 with the AP reporting that the FDA has found tiny particles of trash in Genzyme made drugs, which according to the article says “bits of steel, rubber and fiber in drug vials could cause serious adverse health effects for patients.

Option wizards were quick to pounce on the opportunity to sell rapidly deteriorating call options in the December 50 and 55 strike prices. While this could be the work of frantic bulls trying to get out of the way of a potential sandstorm it’s more likely the case that trigger-happy bears have been awakened.

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Ahead of the news the December 50 call traded lightly during the morning at a 4.70 premium before slumping to 2.30 on volume measuring a couple of thousand contracts, while the 55 strike fell from a pre-breaking news premium of 1.85 all the way down to 70 cents. While the situation has stabilized, option implied volatility across the field is up around 25% at 42% today. That’s something for call-writers to pay heed to.

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