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Bulls see more value in Valeant

Valeant Pharmaceuticals has been consolidating after a huge run, and one big investor apparently thinks that another rally is coming.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 3,750 July 140 calls for $1.20 and the sale of an equal number of July 110 puts for $1.25. That translates into a credit of $0.05.

The position is similar to owning shares in the fast-growing drug maker, with leverage to the upside or the downside. If VRX rallies the calls they own will appreciate and the puts sold short will dwindle, while the opposite will happen to if the stock drops. (See our Education section for more on long calls and short puts .)

VRX fell 0.85 percent to $125.55 yesterday. It more than tripled between mid-2012 and early this year and has been drifting lower since. The shares have remained above $110 during that time, which could make the trader comfortable writing puts at that level.

The company has also been attempting to buy Botox maker Allergan, but its offers have been rejected so far.

Total option volume was quadruple the daily average in Tuesday's session, according to the Heat Seeker.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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