Someone is bullish on NPS Pharmaceuticals before the company's
Food & Drug Administration panel meeting next month.
optionMONSTER's Heat Seeker monitoring program detected the
purchase of approximately 5,000 September 30 calls for $1.15. A
similar number of September 24 puts were sold around the same time
for $1.20, so they collected a small credit.
They now stand to profit from a rally and will lose money if it
drops. Every contract will initially track about 58 shares, and
that correlation will increase to 100 if the stock surges above $30
or falls below $24. If it remains between those two levels through
expiration, both halves of the trade will become worthless.
The strategy's benefit is that, unlike owning shares, it doesn't
have to be unwound if the stock fails to move. See our Education
section for more on how to improve your trading with options.
NPSP rose 1.42 percent to $27.14 yesterday, and is sitting at the
lower of its recent trading range. It's moved sideways for almost a
year, consolidating from a 400 percent rally in 2013.
The next big event comes on Sept. 12, when an FDA panel will review
the company's Natpara hormone treatment.
Total option volume was 14 times greater than average in the
session, according to Heat Seeker.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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