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Calls bet Vertex will soar by spring

Mike Yamamoto (mike.yamamoto@optionmonster.com)

A long-term trade is looking for Vertex Pharmaceuticals to explode higher by next spring.

More than 3,200 April 82.50 calls were purchased yesterday, led by a print of 3,000 that went for $11.10. This is clearly fresh buying, as open interest in the strike was a mere 65 contracts before the trades appeared.

These long calls are far out of the money and are betting that VRTX will rally above $93.60, a level not seen since November 2000 by mid-April 2014. They could be sold earlier at a profit if premiums rise with a rally before then, but the contracts could expire worthless if shares remain below $82.50. (See our Education section)

VRTX gained 2.69 percent yesterday to close at $78.40. Shares gapped up from about $53 to above $85 in April on positive clinical-trial results for its experiment treatment of cystic fibrosis, and they have been range-bound between $75 and $90 since then.

Overall option volume in VRTX totaled 4,700 yesterday, 34 times its daily average for the last month. Only 139 of those contracts were puts, a further indication of yesterday's bullish sentiment.

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