Options Trading News

June 23, 2014  Mon 12:21 PM CT

AstraZeneca has been steadily working higher, and one big investor expects the trend to continue.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 3,520 January 80 calls for $4. Equal-sized blocks were sold in the January 65 puts for $2.55 and the January 90 calls for $1.50. That translates into a credit of $0.05.

The investor now stands to collect $10 if the British drug maker closes at $80 or higher on expiration. But he or she will be on the hook to buy shares for $65 if AZN is below that price on expiration.

The trader may be comfortable taking that risk because the stock peaked around $68 in February and bounced at $70 last month, which suggests that there is support above the level where they sold puts. (See our Education section for more on long calls and short puts.)

AZN is down 1.38 percent to $74.43 in afternoon trading after a Food and Drug Administration panel questioned positive results for the company's olaparib ovarian-cancer drug. The stock is up 55 percent in the last year, with much of that gain spurred by Pfizer's unsuccessful takeover attempt in April.

Total option volume is more than twice average amounts in AZN so far today, according to the Heat Seeker.
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