Options Trading News

February 3, 2012  Fri 12:20 PM CT

Call selling is hitting ViroPharma as its shares climb to levels not seen in a decade.

VPHM hit $31 this morning, its highest intraday price since 2001, but pulled back and is now up 0.76 percent on the day at $30.33. The stock has doubled in the last six months from 52-week lows below $15.

The drug developer is not a typical name for institutional option traders, as it has an average turnover of just 552 contracts a day. But today that volume is almost 10 times higher.

optionMONSTER's systems show that a trader sold 4,999 March 30 calls for $2.70. The previous open interest was just 156 contracts, so this is clearly a new position.

The activity is not tied to any trading in the underlying shares that we can see. Nevertheless, given that it is in-the-money call selling, it is almost certainly tied to a long stock position.

The trader is looking to collect that option premium and sees relatively stable prices for the stock in the next month. This trader may be trying to sell shares but wants to do so for the premium that the option sale affords. (See our Education section)
Share this article with your friends



The fastest money in the market
View full report »

Premium Services

Education & Strategy

The art of trading

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.

View more education articles »