Sarepta Therapeutics spiked higher with a key upgrade yesterday, and one large investor is looking for even more gains.
optionMONSTER's market scanner shows that 3,000 May 17 calls were sold for $9.30 and $9.40 while 3,000 May 23 calls were purchased for $6.90 yesterday. Volume was below open interest in the lower contracts, indicating that a trader is taking some profits off the table while rolling a bullish position to a higher strike.
Long calls lock in the price where investors can buy stock, allowing them to profit from a rally with limited capital at risk. Their cheap cost can also generate significant leverage on a percentage basis if shares move in the right direction. (See our Education section)
SRPT rose 19.3 percent to $23.30 yesterday but is down 49 percent in the last three months. Shares rose yesterday as Oppenheimer raised its price target to $60 form $45 while maintaining an "outperform" rating.
The drug maker company is hoping for positive news from regulators on its treatment for Duchenne muscular dystrophy. Its next quarterly report is estimated for pre-market hours on May 5.
Overall option volume in SRPT was 3 times greater than average yesterday.
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