BioMarin strategy looks for further gains
BioMarin Pharmaceutical has made a giant move, and one big
investor apparently thinks that it will continue to rally.
optionMONSTER's Heat Seeker tracking system detected the sale of 2,500 January 48 calls for $2.56. Volume was below open interest, which indicates that a winning trade was closed in those contracts.
The investor then replaced that position by purchasing 2,500 January 55 calls for $0.59 and selling 2,500 January 48 puts for $2.18. That new combination will mimic owning shares, and generate significant leverage if the stock continues to appreciate.
BMRN is up 1.74 percent to $49.14 in early afternoon trading, and is up 43 percent so far this year. Positive drug-trial data on its GALNS compound caused the shares to gap higher a month ago, and they've been consolidating at record levels since.
Today's option trade let the investor collect a credit of $4.15. They're now on the hook to buy more shares for $48 if it closes below that level on expiration, but including the money received today their cost would be $43.85. If it runs higher, they will keep making money on the 55 calls. (See our Education section)
Total option volume is more than 5 times greater than average so far today, according to the Heat Seeker.