The bulls keep coming back to Amarin after a jarring selloff
Once considered a takeover candidate, the drug maker gapped lower
on Dec. 7 after announcing that it would market its Vascepa
cholesterol drug without the benefit of a strategic partner.
Management also borrowed at onerous rates to finance the effort.
Friday's option activity indicates that one big investor thinks
AMRN is ready to recover all those losses, and then some.
optionMONSTER's Heat Seeker scanner detected the purchase of 6,000
June 14 calls for $0.50 and the sale of an equal number of June 20
calls for $0.10. Volume was more than triple the previous open
interest at each strike, indicating new positions.
Known as a
bullish call spread
, the strategy is highly leveraged to gains in the share price. It
cost just $0.40 to open and will earn a profit of 1,400 percent if
the stock closes at $20 or higher by expiration on June 21.
The relatively inexpensive cost of the trade is its main benefit,
giving the investor exposure to a runaway rally while limiting risk
in case the stock crashes. (See our
section for more on how options can be safer than stocks.)
AMRN rose 0.59 percent to $8.58 on Friday. Calls outnumbered puts
by a bullish 21-to-1 ratio. More than 20,000 contracts traded in
total, compared with fewer than 9,000 in an average session.
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.
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