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Buyers return to Watson on pullback

Watson Pharmaceuticals dropped on Friday, but the bulls saw it as a buying opportunity.

optionMONSTER's Heat Seeker monitoring program detected the purchase of about 4,600 December 65 calls, most of which priced for $1.15 to $1.50. Volume was more than twice existing open interest in the strike.

WPI ended the session at $63.42, down 1.75 percent. Shares are up 23 percent so far this year compared with an 8 percent drop for the S&P 500, but they have spent the last six months consolidating between $60 and $70.

The drug maker has beaten estimates for at last three straight quarters, fueled by the introduction of new generic drugs and strong demand for birth-control pills. The stock is now attempting to hold support at its 200-day moving average, which could be leading some chart watchers to think that it's still in an uptrend and will soon continue higher.

Overall option volume in the stock was 8 times greater than average in the session, with calls outnumbering puts by 10 to 1, 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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