Options Flow Summary and Unusual Activity Alert for Medicines Company (MDCO)
General Sentiment
We are seeing range-bound trading today, with a morning rally fading. Broad averages are currently down about Ω% while the CBOE VIX is holding steady at 28.52.
Options volume is relatively light, with equal numbers of puts and calls trading with a slightly bearish directional bias.
Medicines Company (MDCO) 17.89 -0.45%
Unusual volume noted today in drug stock MDCO, with more than 2,800 contracts trading versus typical levels closer to 830 contracts per day.
Buyers of the March 17.5 calls dominate todayís flow, paying more than $2 for 2,500 calls and causing implied volatility to lift several points. ISE Sentiment data confirms this activity be a customer account opening new positions.
The chart shows two spikes last week, starting with a put-call spread on Tuesday and more interestingly on Friday. At that time a customer buyer lifted 1,000 July 22.5 calls on the ISE when the stock was nearly $1 higher than current levels.
Earnings are expected next week. The total open interest is growing in connection with this pickup in volume, suggesting traders may be looking for a significant up move over the next few weeks.
Posted By: Trade Alert
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About Henry Schwartz
Henry Schwartz has traded derivatives on US and European exchanges for nearly 20 years. His experience includes market-making and institutional trading at the Hull Group, Salomon Brothers, Bear Stearns and most recently Banc of America Securities, where he led the electronic market-making project coincident with the launch of the ISE. His current work involves real-time stream analysis of options market activity for a number of leading institutional sell-side firms.
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