Limited upside seen for Supernus
Supernus Pharmaceuticals surged after the approval of one its drugs yesterday, but traders apparently believe that further gains will be limited this year.
More than 14,000 December 8 calls traded against previous open interest of just 782 contracts yesterday, clearly indicating new activity. The options were sold from $0.40 down to $0.25, where the biggest block of 4,303 changed hands.
The calls weren't tied to any trades in the underlying stock identified by our systems yesterday, so they could have been sold naked. But they were more likely traded as a covered call against a long position established at an earlier date, which would be bullish up to the $8 strike price but not beyond. (See our Education section)
The company, which focuses on nervous-system disorders, jumped to $8.40 at the open but closed at $6.90, still up 3.92 percent on the day. This came with the approval of its epilepsy treatement by the Food and Drug Administration. The $8 level has been resistance for SUPN going back to November, when it gapped down from above $11.
Nearly 30,000 SUPN options traded yesterday, compared to a daily average of only 2,289 in the last month. Fewer than 900 of those contracts were puts.
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