Buyers order large dose of Impax calls
Mike Yamamoto | [email protected]
More than 8,000 February 22.50 calls traded in a strong buying pattern yesterday for prices ranging from $1.10 and $1.55, according to optionMONSTER's Heat Seeker tracking system. The volume was more than 9 times higher than the strike's open interest of 851 at the beginning of the day, showing that these are new purchases.
IPXL rose 1.44 percent yesterday to close at $21.86, continuing to move higher since launching a generic version of the Endo Health's Opana ER pain treatment last Friday. The pharmaceutical company gapped down from above $24 in late October after its last earnings release and has been trapped in a tight range between $19.50 and $22 ever since.
Yesterday's long calls, which lock in the price where traders can buy stock, are betting that IPXL will gain at least 8 percent by mid-February. Those options could be sold at a profit earlier if their premiums rise with any rally before then, but the contracts will expire worthless if the stock is below the $22.50 strike price at that time. (See our Education section)
Total option volume in Impax was 12,059 contracts yesterday, compared with a daily average of just 166 in the last month. Overall calls outnumbered puts by 10 to 1, a reflection of the session's bullish sentiment.