CHICAGO ( TheStreet) -- Shares of Origin Agritech ( SEED) have rallied 4% so far on the day to $10.85, thanks to a Rodman & Renshaw upgrade and approval from the Chinese Ministry of Agriculture for the company's genetically modified phytase corn.

The news sparked buying activity in front-month calls and puts during morning trading.

The out-of-the-money December 12.5 calls have traded more than 16,000 times versus current open interest of just 496 contracts, indicating investors traded these options to open. These calls have a 39 delta, which means they should move by 39 cents for every dollar move in the underlying.
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The December 12.5 calls are currently trading up 33 cents, with the stock up 48 cents, which is a larger advance than the delta would suggest. It looks like the majority of the action in this strike happened on the buy side.

Another out-of-the-money option that has seen heavy options action is the December 10-strike put, which have traded 11,600 times so far today. These puts are home to current open interest of 2,840 contracts. The options have gained 25 cents so far today, with a delta of 33. The price of the puts are currently higher than the delta would suggest, also indicating buying action this morning.

Bullish investors could be calling for near-term further upside in the stock after the positive news out of the company today. On the other hand, the bear side could be focused on the run in the stock and the fact that SEED shares are just cents away from their 52-week high.

Bearish investors could be looking for a pullback throughout the next month and buying puts for downside protection, using today's jump higher as their entry point.

Call buyers are looking for the stock to surge roughly 16%, while put buyers are looking for SEED shares to drop around 8% during the next month to make money.

-- Written by Jud Pyle in Chicago
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At the time of publication, Pyle did not have any positions in the stock mentioned. Jud Pyle, CFA, is the chief investment strategist for Options News Network. Pyle started his career in finance in 1994 as a derivative analyst with SBC Warburg. After four years with Warburg, Pyle joined PEAK6 Investments, L.P., in 1998 as an equity options trader and as chief risk officer. A native of Minneapolis, Pyle received his bachelor's degree in economics and history from Colgate University in 1994. As a trader, Pyle traded on average over 5,000 contracts per day, and over 1.2 million contracts per year. He also built the stock group for all PEAK6 Investments, L.P. hedging, which currently trades on average over 5 million shares per day, and over 1 billion shares per year. Further, from 2004-06, he managed the trading and risk management for PEAK6 Investments L.P.'s lead market-maker operation on the former PCX exchange, which traded more than 10,000 contracts per day. Pyle is the "Mad About Options" resident expert. He is also a regular contributor to "Options Physics."