Bull raises dosage in Alexza Pharma

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Alexza Pharmaceuticals has seen some volatile trading around recent news on its drug pipeline, but one trader apparently remains optimistic.

A trader sold a block of 2,500 January 5 calls for $0.07 and bought the same number of February 5.50 calls for $0.22 this morning, according to optionMONSTER's Heat Seeker system. Volume was below open interest in the January options but above it in the February contracts, indicating that an investor was rolling a position to the later-dated contracts.

The move gives the trader another month for the upside strategy to work while raising the strike price, indicating further bullishness. The new long calls are looking for the stock to gain more than 20 percent by expiration in mid-February but will expire worthless if the shares are below the $5.50 strike price at that time. (See our Education section)

ALXA is down 1.67 percent to $4.72 this morning. The company gapped down from the $6 level on Dec. 24 despite approval from the Food and Drug Administration for Adasuve, its treatment for schizophrenia and bipolar disorder. On Jan. 4 Piper Jaffray cited "uncertainty of limitations" on the drug's use while initiated coverage of ALXA with a "neutral" rating and a $5 price target.

Overall option activity in the name is nearly double its daily average so far. Calls are outpacing puts by more than 3.5 to 1.

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