Calls Purchased on Medivation (MDVN)

Shares of Medivation (MDVN) are trading lower on the session by 1.77%, at $52.71. The stock has been retracing lower over the past two weeks and is currently testing the 50-day moving average.

With shares sitting at a critical support level, upside calls are active on the name today. Within the first hour of trading, call volume has popped to 3.4x normal volume.

The heaviest trading is coming in December, where the $62.50 call was purchased 1,800 times, near the offer, for $1.30; the bid/ask spread was $1.25-1.32 at the time of trade.

With open interest of 2,698 contracts, it is unclear whether this is fresh positioning or the closing of short calls. In either case, the trade voices the opinion that shares have the potential to move higher into the end of the year.

30-day implied volatility is popping slightly today, up 2.7% to 47.24%. While this is roughly inline with 30-day historical vol, at 40.32%, it represents a large divergence to 10-day realized vol at only 27.62%.

At $1.30, the trader paid 47% for the Dec $62.50 call, further showing that the options market is looking for the name the start moving dramatically soon.

Medivation, Inc. is a biopharmaceutical company focused on the rapid development of small molecule drugs to treat serious diseases for which there are limited treatment options. 

About Michael Zerinskas

Originally from Chicago, Michael J. Zerinskas began his career as an intern for a small high-frequency trading firm based at the CME; he then moved on to become Chief Options Strategist at Benzinga.com. Michael is now Unusual Activity Editor at The Options Insider, specializing in VIX, volatility, and flagging unusual activity.