Call buyers bet on Opko rebound

Mike Yamamoto (
June 5, 2014

Traders are looking for Opko Health to rebound in the next six weeks.

About 4,600 July 10 calls were bought yesterday, mostly in two prints of 2,000 that each went for the ask price of $0.15, according to optionMONSTER's Heat Seeker tracking system. These are clearly new positions, as open interest in the strike was just 173 contracts before the session began.

Our scanners also detected heavy buying in the July 9 and 11 calls. Volume was above previous interest in those strikes as well, indicating that these are new positions.

All of these long calls lock in the price where the stock can be purchased through expiration in mid-July no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will lose value if the shares drop. (See our Education section)

OPK fell 0.96 percent yesterday to close at $8.77. The biopharmaceutical and testing company fell sharply in mid-April until finding support around $8, and shares have been trying to recover in recent weeks.

Total option volume in Opko reached 12,300 contracts yesterday, triple its daily average for the last month. Overall calls outnumbered puts by 8 to 1, a reflection of the session's bullish sentiment.

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