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Ariad Pharma trader won't jump ship

David Russell (david.russell@optionmonster.com)

Ariad Pharmaceuticals took a skid last month, but one investor isn't abandoning the stock.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 2,190 June 19 calls for $1 and the sale of an equal number of June 22 calls for $0.35. The same number of May 21 calls traded at the same time for $0.30, but volume was below open interest in those.

It appears that the investor has previously owned the May contracts, hoping for a rally, but then rolled the position forward in time. He or she now has a new position in the June 19/22 call spread , which will expand to $3 if the drug developer closes at $22 or higher on expiration. Making the adjustment cost $0.35. (See our Education section)

ARIA rose 2.19 percent to $17.25 yesterday but is down 19 percent since mid-March. The shares are back near a level where they consolidated between last May and July, which could make some chart watchers think that they're due for a bounce.

Total option volume was quadruple the daily average in the session, with calls outnumbering puts a bullish 24-to-1 ratio.

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