Markets

Valeant attracts unusual bullish trade

One investor is using an unusual strategy to get long Valeant Pharmaceuticals.

optionMONSTER's Heat Seeker monitoring system detected the purchase of about 1,650 January 52.50 calls for $0.95 and 3,200 December 50 calls for $0.55. Some 1,900 December 42 puts were sold at the same time for $0.30. Volume was above open interest in all three strikes.

The trade cost about $275,000 and is highly leveraged to upside in the drug maker, which enjoyed a phenomenal run between June 2010 and April 2011. The position also stands to lose money from a near-term drop in Valeant shares because of the short puts . (See our Education section)

The stock is off 0.13 percent to $46.15 this afternoon. It traded over $54 in July, fell as low as $32.05 in early October, and has been muscling its way higher since.

VRX had strong earnings the last time results were published on Nov. 3. Management raised guidance and announced a $1.5 billion share buyback. (See researchLAB for more)

Overall option volume in VRX is triple the normal amount so far today, 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.

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.

Other Topics

Options

Latest Markets Videos