Orexigen Therapeutics has pulled back to a key level, but traders are looking for a rebound in the next six weeks.
About 2,000 August 7 calls were purchased on Wednesday as premiums rose from $0.39 to $0.50, according to optionMONSTER's Heat Seeker tracking system. The volume was nearly double the previous open interest in the strike, indicating that this is fresh buying.
These long calls , which lock in the price where traders can buy the stock, are looking for OREX to rally above $7 by mid-August. If it remains below that strike price, the contracts will expire worthless. (See our Education section)
OREX fell 1.04 percent to $5.70 on Wednesday, closing below its 200-day moving average for only the second time since last November. Shares have been drifting lower since hitting its 52-week highs in late May.
The biopharmaceutical company, which focuses on obesity treatments, is scheduled to present at the JMP Securities Healthcare Conference this coming Wednesday.
Total option volume in Wednesday's truncated session was 6 times its full-day average for the last month. Calls outnumbered puts by 6 to 1, a further indication of the bullish sentiment.
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