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Bulls taking a dose of Ariad Pharma

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Ariad Pharmaceuticals has run sharply higher in recent days, and traders are anticipating more gains after company presentations this week.

optionMONSTER's Heat Seeker system identified heavy buying in the September 23 calls for premiums ranging from $0.55 to $1.38 on Friday. About 2,300 contracts traded at strike, far above the open interest of just 292 before the session began, indicating that new positions were established.

These long calls lock in the price where traders can buy the stock no matter how far it might rise. But if ARIA remains below $23, the contracts will expire worthless by the end of next week. (See our Education section)

ARIA jumped 7.52 percent on Friday to close at $22.31. The drug developer had been falling since its second-quarter report on Aug. 7 but then bounced at $17 and rallied hard last week, breaking above its 50- and 200-day moving averages.

Management is scheduled to present at two industry conferences on Wednesday, the Stifel Healthcare Conference in Boston at 8:35 a.m. ET and the Morgan Stanley Global Healthcare Conference in New York City at 1:30 p.m. ET.

Total option volume in ARIA topped 11,100 contracts on Friday, quadruple its daily average for the last month. Overall calls outpaced puts by 3 to 1, reflecting the session's bullish sentiment.


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