Our researchLAB tool flagged Achillion Pharmaceuticals as a
bullish setup over the weekend, and yesterday the options agreed.
An investor bought 2,000 September 10 calls for $1.60 and sold
2,000 September 15 calls for $0.45, optionMONSTER's Heat Seeker
system shows. Volume was more than triple open interest at each
strike, indicating that these are new positions.
Owning calls locks in the price where investors can buy shares in
the drug developer, while selling them forces an exit if a certain
level is reached. In the case of yesterday's trade, the investor
will collect $5 if ACHN goes to $15 by expiration. Based on the
$1.15 outlay, that would translate into a profit of 335 percent.
section for more on the strategy, which is known as a
bullish call spread
ACHN rose 1.61 percent to $8.84 yesterday. The stock is up more
than 8 percent just since the weekend, when a deep pullback to its
200-day moving average caught the attention of our proprietary
The company may have huge potential because it's working to develop
treatments for hepatitis C. Yesterday's bullish trade was probably
a bet for good news from several key trials in the second and third
quarters. Achillion is also presenting at Cowen's Annual Health
Care Conference today and the Barclays Global Healthcare Conference
on March 13.
Total option volume was 7 times greater than average in the
session. Calls outnumbered puts by almost 4 to 1.
(A version of this post appeared on
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