OptionsHouse

Options Trading News

December 12, 2012  Wed 3:16 AM CT

ARNA: SEE CHART GET CHAIN FIND STRATEGIES
Arena Pharmaceuticals saw bullish option activity yesterday ahead a presentation at an industry conference this morning.

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.
Share this article with your friends


OptionsHouse

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Education & Strategy

The Problem with Trading Earnings

AP Options specializes in Swing Trading. Swing trading is the art of locating short term, quick, aggressive movements in a stock normally created by the technicals but, can be sometimes created by the fundamentals. These trades, at least in this service, last a couple of days to a week in the majority of cases.

View more education articles »