Questcor Pharmaceuticals has doubled in two months, and one
trader apparently thinks that it's reached a top.
optionMONSTER's tracking systems detected heavy selling of the May
10 calls, which changed hands more than 11,000 times against open
interest of 1,099 contracts. Most of the volume priced for $0.55 to
QCOR fell 5.02 percent to $9.28 yesterday, with most of the
downside occurring as the options traded. Premiums fell by about
$0.15 even as the stock declined by a few cents, which reflects the
selling pressure on the calls.
The option activity occurred one session after the drug company
reached to a new all-time high of $9.98, the zenith of a rally that
began with the company's fourth-quarter earnings report on March 2.
It isn't immediately clear why QCOR has been climbing so
aggressively, as its results don't appear to have exceeded
The call selling reflects an expectation that the drug maker will
consolidate or pull back over the next three weeks. Selling options
at this point in the expiration cycle will let the trader profit
from the accelerating pace of time decay that will take place as
May 21 approaches. (See our Education section)
Overall options volume in QCOR was 25 times greater than average in
(Chart courtesy of tradeMONSTER)