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Medivation bull looks for more upside

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Medivation has been rallying, and one investor is adjusting a position in hopes of further upside.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,500 May 55 calls for $4.32 and the sale of 2,500 May 60 calls for $0.47. Volume was more than triple the previous open interest at each strike, indicating new activity. The trade came just seconds after 1,755 May 44 calls were sold for $8.50, though volume was below open interest in that strike.

It appears the investor previously owned the May 44s and was sitting on some nice profits after the options appreciated in value with the stock rising. He or she then closed the position and rolled it into a bullish call spread in the May 55s and 60s.

The investor received a credit of $529,250 in the process and stands to collect an additional $1.25 million if the stock closes at or above $60 on expiration. (See our Education section)

MDVN rose 2.72 percent to $52.20 yesterday. It rallied more than 500 percent between November 2011 and October 2012 as investors priced in future sales of its Xtandi cancer drug. Shares then traded sideways before bouncing at the bottom of that range in late March, and now they are up 24 percent in a little more than two weeks.

Total option volume was 6 times greater than average in the session, according to Heat Seeker. Calls outnumbered puts a by a bullish 7-to-1 ratio.

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