United Therapeutics has pulled back after a strong run, and now the bulls are returning to the name.
optionMONSTER's Heat Seeker monitoring program detected the purchase of 1,000 November 100 calls for $6.50 and the sale of an equal number of November 130 calls for $0.65. Volume was more than quadruple previous open interest in each strike, which indicates that new positions were initiated.
The investor now the right to buy the drug maker for $100 if it's above that level on expiration but will have to sell if it goes over $130. He or she paid $5.85 to open this vertical spread with the chance to make a profit of 412 percent based on the cost. (See our Education section for more on the leveraging power of options.)
UTHR fell 0.46 percent to $90.16 yesterday and has been drifting lower all year after doubling in 2013. The biotechnology company has enjoyed strong growth for its drugs that alleviate the symptoms of pulmonary arterial hypertension. If it follows last year's schedule, earnings will come out in late July and late October, which provides two catalysts for the bullish spread to perform.
Overall option volume was 13 times greater than average in the name, with calls accounting for a bullish 76 percent of the total.
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