Investor is rolling with Warner Chilcott

optionMONSTER

A trader is buying another month to look for a pop in Warner Chilcott's shares.

optionMONSTER's Heat Seeker system detected the sale of 5,000 July 19 calls for $0.82 and the purchase of 5,000 August 19 calls for $1.17 on Friday. Volume was below previous open interest in the July options but above it in the August contracts, indicating that a position was being rolled forward.

The trader closed the July options before they expired at the end of Friday's session and paid a net $0.35 to get another month for the position to profit. The August long calls , which lock in a $19 purchase price for WCRX, will track the share price closely because they are in the money but will rapidly lose value if the stock doesn't climb soon. (See our Education section)

WCRX rose 0.66 percent on Friday to close at $19.87. The speciality-pharmaceutical company reached a 52-week high of $20.75 on May 22 after announcing that it would be acquired by Actavis for $8.5 billion, or $20.08 per share, pending approval by investors. The stock has been trading in an increasingly tight range since then, mostly between $19 and $20.

Total option volume in the name was more than 7 times its daily average for the last month. Only 50 puts changed hands in the session.

The Dublin-based company is scheduled to released second-quarter results on Wednesday after the close.


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