Options Trading News

One investor is doing a reality check in Vivus, which has more than doubled so far this year.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 4,599 July 27 calls for $3.85 and the sale of an equal number of July 32 calls for $1.76. A block of 2,299 July 35 calls was sold less than a minute later, but volume was below open interest in the strike.

It appears that the investor closed an existing long position in the 35s, deeming a move to that level unlikely. He or she then opened a vertical call spread in the 27s and 32s, allowing him or her to leverage a move between those two price points. The sentiment remains bullish but is slightly less enthusiastic. (See our Education section)

VVUS fell 1.31 percent to $24.57 this morning. The pharmaceutical company began the year around $10 and shot higher in late February after a Food and Drug Administration panel recommended approval of its Qnexa obesity drug. Shares have been grinding slowly higher since.

Overall option volume in VVUs is twice the average amount, with calls outnumbering puts by 5 to 1.