Can anything stop Teva Pharma?
Teva Pharmaceutical Industries woke up last month, and the bulls apparently believe that it will keep on running.
optionMONSTER's tracking programs detected a surge of call volume in the drug maker, mostly focused on the September expiration. It started with blocks of 4,000 contracts each in the 60 calls and 67.50 calls, which traded for $8.50 and $4 respectively. Volume was below open interest at the lower strike, so an existing position was rolled forward in time and to the higher strike.
It isn't clear which was bought and which was sold, but either way the activity is bullish. The investor may have previously owned the 60 long calls and chalked up huge profits after the stock rallied. Swapping out to the 67.50s would let him or her recover $4.50 and remain positioned for further gains.
Alternatively, the trader might own the stock and had sold the 60s previously as part of a covered call . In that case rolling the short calls higher would cost $4.50 but let him or her earn an additional $7.50 on the shares. (See our Education section)
TEVA fell 1.15 percent to $66.37 on Friday. Option traders began making long-term bullish bets on the stock in early March as the stock traded in a tight range around $57. It then woke up suddenly as the paper moved to the short-term and our premium subscribers were soon sitting on profits of about 400 percent.
Some 4,000 September 70 calls were also bought later in the session for $3.40. Volume was below open interest at the strike.
Overall Teva option volume on Friday was twice its daily average for the last month. Earning are due April 30.
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