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How traders are playing Vanda spike

Chris McKhann (chris.mckhann@optionmonster.com)

Vanda Pharmaceuticals have spiked higher on news that the Food and Drug Administration has granted a priority review for a new application, and traders are betting that the stock will hold much of those gains.

A trader sold 2,937 September 9 puts for $0.43 on a wide bid/ask spread, according to optionMONSTER systems. The previous open interest was just 71, so this is clearly a new position.

The put selling is a bet that VNDA will remain above $9 through expiration in mid-September. The trader is also risks having to buy shares if they are below that level. (See our Education section)

VNDA is soaring 40.4 percent to $11.30 this morning. Shares reached a 52-week high of $13.30 in mid-June but fell below $8 in the following two weeks.

More than 6,000 VNDA options have changed hands so far today, already 4 times the daily average of the last month. 

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