Unusual Options Activity Alert for El Paso Energy (EP) & Eli Lilly (LLY)
El Paso Energy (EP)
El Paso Energy (EP) has seen two days of active call buying on optimism about the companyís new properties. Shares are down $.42 to $21.32 late Tuesday and some players are using the weakness to enter bullish trades.
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The action comes after the company announced that it increased its landholdings in the hot Haynesville Shale area. The comments came during apresentation at the Wachovia Nantucket Equity Conference. Optionstraders seemed to like the news, and snapped up EP calls Monday andTuesday. On Monday, a total of 28,000 EP calls traded, compared to3,434 puts. Tuesday, another 19,000 calls traded, compared to 2,500puts.
Eli Lilly (LLY)
Eli Lilly (LLY) saw heavy trading Tuesday. Shares were trading down $.76 to $46.84 late in the day after the FDA announced it will take another three months to review the application for blood thinning prasugrel. Lilly is aiming to get approval of prasugrel for treatment in patients with acute coronary syndromes and who are at risk of blood clotting. Once approved, prasugrel will compete with blockbuster drug Plavix. The FDA is now slated to approve the application by September 26.
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Consequently, some players were seen unwinding some volatility plays inthe July contracts because the timing of the announcement has beenpushed back. The July 45 puts are the most actives, with 25,463 tradedand roughly 30 percent of that volume hitting bid side.
Meanwhile,the July 50s, the days second most actives, only saw 22 percent hittingoffer side. Implied volatility has gapped lower, down 11.5 percent dueto the volatility selling on Tuesday.
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About Frederic Ruffy
Frederic Ruffy is a Freelance Writer and Options Trading Strategist. In addition to writing market commentary and trading-related books and articles, Fred has also worked as an instructor, educating investors on advanced topics like measuring volatility, the benefits of sector rotation and the risks and potential profits from trading around earnings. His market observations are mentioned frequently in the financial press and he currently trades stocks, futures, and options in Salt Lake City, Utah.
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