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Buyer takes another dose of Medicines

David Russell (david.russell@optionmonster.com)

The bulls still like Medicines Co. as the drug maker continue to make new highs.

optionMONSTER's Heat Seeker trade scanner detected the purchase of almost 4,000 July 38 calls for $0.65 and $0.70 and the sale of 1,561 July 30 puts for $1.10. Volume exceeded open interest at both strikes, indicating that new positions were initiated.

The strategy is bullish, using the premium from selling puts to buy upside calls. That reduced the price by more than half to $98,300. He or she stands to earn big profits if MDCO keeps climbing into the summer, while they face potential losses to the downside because they'll have to buy shares for $30 if they drop below that level. (See our Education Section for more.)

MDCO rose 1.61 percent to $33.40 in afternoon trading, and is up more than 60 percent in the last year. It spent a month consolidating at $30 in January and February, which could make some traders comfortable writing puts at that level.

Many of those gains follows strong Phase 3 clinical-trial data for its cangrelor anti-clotting drug. Total option volume in MDCO is 6 times greater than average so far today, according to Heat Seeker.

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