Jazz Pharmaceuticals has broken out, and one big investor is giving it room to run.
optionMONSTER's tracking systems detected the purchase of 1,000 March 15 calls for $1.92 against existing open interest. The same number of June 18 calls was sold at the same time for $0.96, indicating a short position was rolled to the higher strike.
The investor probably owns JAZZ stock. Yesterday's option trade gave him or her the right to collect an additional $3 of upside on the shares in return for agreeing to hold the position for an additional three months. It also cost them $0.96.
They may be targeting the $18 level because that's about the same price where JAZZ traded when it became a public company in mid-2007.
The stock climbed 4.83 percent to $14.97 yesterday and is up 41 percent since the beginning of the month following a strong third-quarter earnings report. Management also raised guidance amid strong sales of the narcolepsy drug Xyrem.
JAZZ saw a bullish option trade in early October ahead of an expected regulatory ruling on a different product to treat a joint disorder known as fibromyalgia. That trade probably made a small profit.
Some 4,034 contracts traded in JAZZ yesterday, 11 times greater than average. Calls outnumbered puts by almost 3 to 1.
(Chart courtesy of tradeMONSTER)
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