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United Therapeutics sees call selling

Chris McKhann (chris.mckhann@optionmonster.com)

Call selling tops today's option activity in United Therapeutics as the stock pulls back.

UTHR is down 1.45 percent to trade at $54.39 this afternoon. The biotechnology company hit a 52-week high of $57.03 three weeks ago as shares climbed from their 2012 low near $40 reached in mid-April.

More than 10,000 UTHR options have traded today, compared to a daily average of just 500. Only 67 of the contracts were puts, and the November 57.50 calls make up almost all of the action.

But far from being overly bullish, these calls were sold, with the biggest block of 9,186 going for the bid price of $2.50. The previous open interest was just 227, so this is new positioning.

The call selling is a bet that UTHR won't be much above $57.50 at the expiration. These options may have been sold naked with an initial bearish bias, or they could have been traded against long shares in a covered call strategy. The latter would be bullish up to the strike price but not beyond, as the position would not partake in any gains in shares above that level. (See our Education section)

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