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.
Overall option volume in VRX is triple the normal amount so far today, according to the Heat Seeker.
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