Referenced Stocks

Intermune attracts bullish trade

By optionMONSTER,  April 26, 2010, 12:56:07 PM EDT

Intermune has more than tripled this year, and one bull is positioning for more upside.

ITMN Chart optionMONSTER's Heat Seeker tracking system detected the purchase of 4,000 January 55 calls for $9 and the sale of a matching number of January 75 calls for $3.25. The trade resulted in a net debit of $5.75 and volume was more than 45 times open interest in both strikes.

ITMN fell 0.77 percent to $45.05 in late morning trading. The drug developer exploded in March after a Food and Drug Administration panel recommended the approval of its pirfenidone drug, which is used to treat lung disease. The next important news event is the release of first-quarter earnings after the bell on Thursday.

Last month's news pushed ITMN to its highest level since early 2002. Today's call-spread option strategy is designed to leverage a continued rally and will earn a maximum profit of about 248 percent if the shares close at or above $75 on expiration.

The transaction pushed overall options volume in the name to almost triple the average level. Calls accounted for a bullish 79 percent of the activity.

(Chart courtesy of tradeMONSTER)




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: ITMN



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