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Mylan attracts heavy call buying

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Mylan hit a new all-time high on Friday, and the bulls are looking for even more gains.

optionMONSTER's Heat Seeker system detected the purchase of more than 9,000 July 55 calls, mostly going for $0.88 to $1.09. This is clearly fresh buying, as the volume was far above the strike's  previous open interest of just 227 contracts.

These long calls lock in the price where a stock can be bought through mid-July no matter how far it might climb, letting traders position for gains at a fraction of the cost with potentially significant leverage. The contracts could be sold earlier at a profit if premiums rise with a rally before then, but they will expire worthless if shares remain below $55. (See our Education section)

The pharmaceutical name also drew bullish activity in the April 49 calls, with more than 1,700 purchased for $1.52 to $1.59 against open interest of 63 contracts.

MYL rose 1.93 percent to $45.97, just off its intraday peak of $46.01, and is up 63 percent in the last year. The company is scheduled to present at the J.P. Morgan Annual Healthcare Conference tomorrow .

Overall option volume in Mylan was just shy of 20,500 contracts on Friday, more than 10 times its daily average for the last month. Calls accounted for more than 90 percent of the total, reflecing the session's bullish sentiment.

(A version of this post appeared on InsideOptions Pro on Friday.)

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