Options Trading News

February 15, 2013  Fri 10:02 AM CT

One investor is upping the ante in Aegerion Pharmaceuticals, which has doubled since October.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 3,000 March 30 calls for $1.20 and the sale of 1,500 March 25 calls for $4. Volume was below open interest in the 25s but above it in the 30s, which suggests that an existing position was rolled from one strike to the other.

The investor has probably made a nice profit and is now adjusting the trade fur further potential gains. He or she recovered $240,000 of capital and doubled the number of contracts owned at the higher strike.

That will increase leverage but will profit only if AEGR makes a big move in the next month. (See our Education section for more on how options can be used to manage positions.)

AEGR is up 1.42 percent to $29.25 in morning trading after hitting a new all-time high of $29.25 earlier in the session. It's been rallying since mid-October, when a Food and Drug Administration panel voted favorably on the company's lomitapide lipid drug.

Total option volume is more than 7 times greater than average in the name so far today, with calls outnumbering puts by 23 to 1.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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