Sequenom Inc. (SQNM) Still up 100% in 52 Weeks

If you're looking for a company that flew high during the biotechnology boom this last year that is now having trouble making money and increasing revenue, Sequenom Inc is a company that is in a downward spiral at this time. The stock has dropped from a three month high of $25.54 to its current level of $14.63. In addition the company has missed it's earnings the past four quarters, never a good sign.

Options Activity

Surprising, some investors are looking out to January of 2011 and seeing a better stock price than what we see today. With the stock trading at $14.63 on Friday, down 2.73%, there was unusual options activity on Calls with expirations in January of 2011. The strike prices for these options were above the current stock price with 20,000 options traded at the $20 strike price and another 20,000 Call options traded at the $30 strike price.

Earnings Slide

The earnings expected by analysts to be reported in the coming quarters have fallen with the next quarter now expected to be a loss of 23 cents compared to the 19 cent loss analysts were looking for 90 days ago. And the June 2009 quarter is expected to be a loss of 25 cents versus a previously expected loss of 19 cents. Revenue is looking weak with a loss of revenue of 1.6% in the June 2009 quarter compared to the same quarter a year ago.

Get Short

You could get short a small position at this time and look for rallies to increase your short position. An additional strategy is to also take a small positive position in an ETF that follows the biotechnology industry. Hedging your short position with a long position in iShares Nasdaq Biotechnology (IBB) would protect your position if the market does begin to recover at the end of the year.