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Markets

Major confidence in Vanda Pharma

For the second time in a week, traders are betting that there's no going back for Vanda Pharmaceuticals.

optionMONSTER's monitoring systems detected the sale of almost 2,900 July 8 puts against previous open interest of just 277 contracts. Most of the volume priced for $0.33.

Selling puts creates an obligation to buy a stock on a pullback while letting the seller collect income if it stays above the specific level, in this case $8. Investors use the strategy to make money from a stock they like without getting long. It also automatically programs a buy order at a lower price if it drops. (See our Education section)

VNDA rose 6.26 percent to $10.18 yesterday and has more than doubled since the start of last month amid optimism toward its tasimelteon sleep-disorder drug. A similar trade appeared on Friday, when the July 7 puts were sold for $0.27.

Total option volume was 4 times greater than average in yesterday's session.

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

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


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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