Buyers ride momentum in Momenta
Mike Yamamoto | [email protected]
optionMONSTER's tracking systems detected the purchase of 5,000 September 19 calls for $1 and the sale of 5,000 September 16 puts for $0.70 and $0.65. These are clearly new positions, as the previous open interest in the strikes was just 1 and 60 respectively.
The resulting combination spread is strongly bullish because a rally by mid-September would increase the value of the long calls while rendering the puts worthless. But the opposite would occur if the stock drops, and the trader would face the obligation to buy shares if MNTA falls below $16. (See our Education section)
In separate trading, nearly 2,000 August 15 calls were bought for $1 to $2.90 as MNTA rose throughout the day in volume that was also above open interest. These options will track the share price closely because they are in the money.
MNTA spiked up 11.73 percent on Friday to close at $17.34. The stock hit $18.08 earlier in the session, its highest price since January 2012, after rising steadily from the $11 level in early May.
The stock jumped after news that Teva Pharmaceutical will lose its patent on multiple-sclerosis treatment Copaxone in 2014, a year earlier than expected, after a federal appellate court ruling. Momenta has been developing a generic version of the drug in a partnership with Novartis.
Overall option volume in the name reached 15,364 on Friday, compared to a daily average of just 301 contracts in the last month. Calls accounted for 62 percent of the total.
Momenta is scheduled to report second-quarter results before the market opens on Thursday.