Unusual Alkermes Options Trading (ALKS, LLY, AMLN)
Alkermes, Inc. (NASDAQ: ALKS) is seeing some unusual options trading going into investor presentations this week:
- Bank of America Merrill Lynch S-Mid Cap Conference on Wednesday, June 9, 2010, at 2:30 p.m. EST;
- Jefferies Global Life Sciences Conference on Thursday, June 10, 2010, at 4:30 p.m. EST.
Alkermes (ALKS) with a large bullish covered risk reversal as 5,000 November $10 puts are sold at $1.35 and 5,000 November $12.50/$15 call spreads are bought at $0.95, a net credit of $0.40. Therefore the trader makes $0.40 per spread if shares remain above $10 and can make as much as $2.90 per spread with shares above $15. The trade takes options volume to 7X daily average volume. Alkermes is best known for being partnered with Eli Lilly & Co. (NYSE: LLY) and Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN) for the potential blockbuster diabetes drug Byetta, the FDA decision on October 22nd, so this is a bullish bet on that outcome. Alkermes presents at the Lynch Smid Cap Conf. today and Jefferies Conf. tomorrow. Alkermes also is getting an expedited review of it’s Vivitrol for opioid painkillers. So, we have two major catalysts in October for Alkermes, and these large option trades are bullish. Also, Alkermes becomes an obvious takeover target by one of it’s partners on a successful outcome. Shares have held the $10.50 support level, also the 200 day EMA here.
-Joe Kunkle, OptionsHawk.com
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