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Trader bets on Aegerion rebound

David Russell (david.russell@optionmonster.com)

Aegerion Pharmaceuticals is trying to rebound from a long slide, and now the bulls are stepping in.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,000 May 52.50 calls for $5.80. The same numbers of May 40 puts and May 60 calls were sold for $2.80 and $3 respectively. Volume was more than 6 times open interest at all three strikes, showing that new positions were initiated.

It cost nothing upfront to implement the complex bullish strategy, which will return $7.50 if the drug maker closes at $60 or higher on expiration in mid-May. (See our Education section for more on the trade, which combines put selling with a vertical call spread .)

AEGR is up 3.5 percent to $50.50 in midday trading. The shares surged more than 500 percent between October 2012 and October 2013, then proceeded to lose half their value.

It's noteworthy that today's investor sold puts at $40 because the stock spent two months around that level a year ago. He or she is on the hook to buy the stock if it goes under that price, so the trader is using the consolidation area as support.

Total option volume in the name is triple its daily average so far in the session.

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