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Buyers bet Isis has more room to run

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Isis Pharmaceuticals surged through key levels last week, and traders are looking for more gains.

More than 2,000 February 14 calls were purchased on Friday, most of them going for $0.95, according to optionMONSTER's Heat Seeker system. The volume was well above the strike's open interest of 358 contracts before trading began that day, clearly indicating fresh buying.

ISIS rose 0.45 percent on Friday to close at $13.28, its highest level since mid-October. The stock broke through resistance at its 200-day moving average and shot higher last week after the company provided updates on its drug pipeline at the JP Morgan Healthcare Conference.

Friday's long calls , which lock in purchase price for the stock, are looking for ISIS to gain more than 12.5 percent by mid-February. These options could be sold at a profit earlier if their premiums rise with another rally before then, but they will expire worthless if the shares are below the $14 strike price at that time. (See our Education section)

Total option volume in ISIS was nearly 5,000 contracts on Friday, more than 6 times its daily average in the last month. Only 569 puts changed hands in the entire session, a reflection of the day's bullish sentiment.

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