Bull stays with Arena Pharmaceuticals
Mike Yamamoto | [email protected]
A trader sold 3,500 January 5.50 calls for $3.35 and the purchased the same amount of July 6 calls, also for $3.35, according to optionMONSTER's Heat Seeker system. Volume was below the open interest in the January options but above it in the July contracts, suggesting that the trader rolled the calls forward to the higher, later-dated strike.
The transaction was done at zero cost and provided an additional six months for the upside strategy to work. The new in-the-money calls, which lock in the price where the stock can be bought, are looking for ARNA to gain roughly 2.5 percent by expiration in mid-July. The options could be sold for a profit earlier if the stock rallies before then, but they will lose value if the shares don't rise.
ARNA rose 4.35 percent yesterday to close at $9.12. The stock, which had began the year trading around $2, spiked up to a 52-week high of $13.50 in late June but has been range-bound between $7 and $10 for the last five months.
The company is focusing on an anti-obesity drug called Belviq that can also be used to treat Type II diabetes. Management is scheduled to provide a corporate overview at the Oppenheimer 23rd Annual Healthcare Conference this morning in New York and will present at the Annual J.P. Morgan Healthcare Conference in early January.