Trader sees Alkermes heading up-07/07/2009
commentary by: David Russell
At least one large investor is betting Alkermes will make a move by early next year.
optionMONSTER's Heat Seeker monitoring program detected the purchase of about 1,300 February 12.50 calls for $1.20 to $1.28 matched against the sale of an equal number of November 12.50 calls for $0.60 to $0.68. Volume was more than triple open interest in both strikes.
The calendar spread is designed to profit from higher levels of volatility later in the year because the November options that were sold short will lose their value more quickly than the February options that were purchased. The trade will also profit from ALKS remaining below $12.50 through November expiration and then rallying above that level. (See optionMONSTER's Education section)
ALKS rose 0.10 percent to $10.47 yesterday and is up 23 percent in the past month. Yesterday's options trader may be wagering on good news from a Phase III trial of the company's Vivitrol drug, which is currently approved for alcohol withdrawal and is being tested for additional use against opioid addiction. Results are expected to be released in 2009.
The activity pushed options volume in ALKS to more than three times average, according to Heat Seeker.
(Chart courtesy of tradeMONSTER)
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