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Major confidence in Vanda Pharma

David Russell (david.russell@optionmonster.com)

For the second time in a week, traders are betting that there's no going back for Vanda Pharmaceuticals.

optionMONSTER's monitoring systems detected the sale of almost 2,900 July 8 puts against previous open interest of just 277 contracts. Most of the volume priced for $0.33.

Selling puts creates an obligation to buy a stock on a pullback while letting the seller collect income if it stays above the specific level, in this case $8. Investors use the strategy to make money from a stock they like without getting long. It also automatically programs a buy order at a lower price if it drops. (See our Education section)

VNDA rose 6.26 percent to $10.18 yesterday and has more than doubled since the start of last month amid optimism toward its tasimelteon sleep-disorder drug. A similar trade appeared on Friday, when the July 7 puts were sold for $0.27.

Total option volume was 4 times greater than average in yesterday's session.

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