A long-term investor apparently thinks that Acadia Pharmaceuticals may keep on running after a giant move.
optionMONSTER's Heat Seeker monitoring program detected the purchase of 10,000 January 2015 20 calls for $4.90 and the sale of an equal number of January 2015 35 calls for $1.35. Volume was more than 13 times open interest at both strikes, indicating that new positions were initiated.
Known as a bullish call spread , the trade cost $3.55 and will control a move between the two strike prices. In the case of Friday's trade, it will expand to $15 if the stock closes at or above $35 on expiration 18 months from now. Based on the entry price, that would translate into profit of 323 percent. (See our Education section for more on how to generate leverage with options.)
ACAD rose 4.1 percent to $19.31 and is up more than 700 percent since releasing positive data about its Pimavanserin drug for Parkinson's disease on Nov. 25. More recently it's been climbing on enthusiasm surrounding a potential glaucoma treatment being developed with Allergan.
The stock is now back above its previous all-time peaks from 2006 and 2007. That could be leading some traders to believe that it will keep on running to new highs.
Total option volume was 6 times greater than average in the session, according to the Heat Seeker. Calls outnumbered puts by a bullish 14-to-1 ratio.
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