Options Trading News

November 20, 2012  Tue 11:19 AM CT

Traders are finding a buying opportunity in pharmaceutical company Warner Chilcott, which has lost half its market value in the last seven months and is close to its 52-week low.

optionMONSTER's Heat Seeker tracking system detected the purchase of 3,035 January 13 calls for the ask price of $0.30. The volume was above the open interest of 2,510 at the beginning of the day, indicating new activity.

WCRX is down 2.5 percent to $11.69 in early afternoon trading. The drug developer beat earnings expectations on Nov. 9 but has faced stubborn resistance at the $12 level for the last month. Shares have plummeted 50 percent from their 52-week high of $23.28 of April 30 to their low of $11.21 on Nov. 5.

Today's call buyers are looking for WCRX to gain roughly 14 percent by expiration in less than two months. The options could be sold at a profit earlier if their premiums rise before then, but the calls will expire worthless if the stock doesn't rally.

Total option volume in the name is already 6 times its full-session average. Calls are outpacing puts by 3 to 1.
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