Bull sees more gains ahead for Arena
Chris McKhann | firstname.lastname@example.org
ARNA trades at $6.04 this afternoon, up 65 percent on the day. The drug developer opened the session at $7.02 after the Food and Drug Administration advisory panel voted to approve the company's lorcaserin weight-loss medicine. Shares were down at $2 just a couple of weeks ago.
A trader sold 9,700 July 7 calls for $0.90 against open interest of 26,565, according to optionMONSTER's Heat Seeker system. At the same time, he or she bought 9,700 October 7 calls for $1.35 at nearly 3 times the open interest at that strike, indicating that a new position being opened.
The trader could be rolling a long position forward, selling the July calls and buying the October contracts to get more time for ARNA to continue rallying. Or this could be a calendar spread that is looking for Arena to trade back up around that $7 level in coming months. The latter spread risks only $0.45 until that first expiration. (See our Education section)
The activity has pushed ARNA's total option volume to more than 185,000 so far today, compared with a daily average of 46,000.