Bulls not giving up on Warner Chilcott

By optionMONSTER,  June 27, 2012, 01:10:53 PM EDT

Bullish sentiment continues to build in Warner Chilcott.

The Irish drug maker exploded higher in late April after the Times of London said it was a potential takeover target at the hands of German's Bayer. The stock has been retreating since then, and the bulls have been nibbling as it pulls back.

Today's activity focuses on the August 19 calls, which were bought for $1,52, and the August 16 puts, which were sold for $1.10. An even 3,000 contracts traded in each against no previous open interest. The transaction accounted for most of the option activity in the name so far today.

It cost $0.42 to open the position, which will make money on the long calls if WCRX rallies. He or she also face potential losses on the short puts if it declines. While similar to owning shares, the strategy differs because it will track movement in the stock price less closely as time passes. (See our Education section)

There was also bullish call buying in the stock on June 25 and June 5 .

WCRX is up 0.9 percent to $17.85 in afternoon trading.




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.


This article appears in: Investing, Options

Referenced Stocks: WCRX



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