What's behind Vivus call selling

Chris McKhann (chris.mckhann@optionmonster.com)
June 9, 2014

Call selling sees limited upside in biopharmaceutical company Vivus through the end of summer.

More than 15,000 VVUS options changed hands on Friday, almost 5 times its daily average for the last month. The volume was dominated by the trade in the September 8 calls.

optionMONSTER systems show that a trader sold blocks of 9,950 and 1,495 September 8 calls for $0.09. These are clearly new positions, as the open interest at that strike was just 161 contracts before the trades appeared.

The call selling wasn't tied to any trading in the underlying stock identified by our systems on Friday, so it could be naked selling, especially given how far out of the money these contracts were. It could also be selling against existing long stock in a covered-call position , which would be bullish up to the $8 strike price but would not profit above that. (See our Education section)

VVUS gained 3.54 percent on Friday to close at $5.27. Shares were above $10 in mid-December but hit a 52-week low of $4.56 two weeks ago.

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