Options Trading News

June 13, 2013  Thu 12:20 PM CT

For the second time in less than a month, the bulls are getting long Medivation.

optionMONSTER's Heat Seeker monitoring system detected the purchase of almost 2,200 September 60 calls, most of which priced for $3.50. Volume was more than triple previous open interest at the strike, indicating that new money was put to work on the long side.

These long calls lock in the price where a stock can be purchased, letting investors cheaply position for gains at a fraction of the cost. They can generate significant leverage in a rally. (See our Education section)

MDVN's July 50 calls were also purchased for $3.50 in late May. The drug maker inched higher after that activity, and those contracts almost doubled to $6 by earlier this week.

Shares are down 0.67 percent to $49.75 in afternoon trading today. It rallied more than 400 percent between November 2011 and October 2012 but has been staggering in a range since. The company's main product is the Xtandi cancer drug, which was approved last summer.

Total option volume is triple the daily average in MDVN so far today, according to the Heat Seeker. Calls outnumber puts by more than 24 to 1.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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