BioMarin strategy looks for further gains

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BioMarin Pharmaceutical has made a giant move, and one big investor apparently thinks that it will continue to rally.

optionMONSTER's Heat Seeker tracking system detected the sale of 2,500 January 48 calls for $2.56. Volume was below open interest, which indicates that a winning trade was closed in those contracts.

The investor then replaced that position by purchasing 2,500 January 55 calls for $0.59 and selling 2,500 January 48 puts for $2.18. That new combination will mimic owning shares, and generate significant leverage if the stock continues to appreciate.

BMRN is up 1.74 percent to $49.14 in early afternoon trading, and is up 43 percent so far this year. Positive drug-trial data on its GALNS compound caused the shares to gap higher a month ago, and they've been consolidating at record levels since.

Today's option trade let the investor collect a credit of $4.15. They're now on the hook to buy more shares for $48 if it closes below that level on expiration, but including the money received today their cost would be $43.85. If it runs higher, they will keep making money on the 55 calls. (See our Education section)

Total option volume is more than 5 times greater than average so far today, according to the Heat Seeker.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: BMRN

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