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Questcor traders are turning bullish

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Questcor Pharmaceuticals rose sharply last week on a positive report about a key treatment, and traders are counting on more good news ahead.

More than 4,300 October 34 calls traded in a heavy buying pattern in 10 minutes on Friday, led by a print of 2,493 that went for $5, according to optionMONSTER's Heat Seeker monitoring system. Open interest in the strike was just 104 contracts before the session began, indicating that this is new positioning.

QCOR rose 6.17 percent on Friday to end the week at $36.29. The stock sold off in mid-May after the company's presentation at an industry conference but spiked higher on Friday after insurer UnitedHealthcare said Questcor's Acthar Gel is medically necessary in the treatment of certain cases of infantile spasms and multiple sclerosis.

Friday's call buying , which locks in the purchase price for the stock, will track the share price closely because the contracts are in the money . They are looking for QCOR to rally above $39 by mid-October but will expire worthless if shares remain below the $34 strike price. (See our Education section)

Total volume in the name topped 13,000 contracts on Friday, nearly quadruple its daily average for the last month. Calls outnumbered puts by 4 to 1.

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