OptionsHouse

Options Trading News

February 15, 2013  Fri 10:02 AM CT

AEGR: SEE CHART GET CHAIN FIND STRATEGIES
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.
Share this article with your friends


OptionsHouse

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »