Cubist Pharmaceuticals is coming off a roller-coaster week, but one trader apparently believes that its next move will be higher.
optionMONSTER's Heat Seeker system detected the purchase of 2,000 April 45 calls for $0.90 in 20 seconds on Friday. This is clearly a new position, as the strike's open interest was just 21 contracts before the session began.
CBST rose 2.45 percent to finish the session at $43.47, closing above its 50- and 100-day moving averages. The stock fell sharply last Monday after the company announced that it had secured an option to buy drug developer Adnyxx for an undisclosed sum. But shares rebounded two days later when the Food and Drug Administration granted fast-track status for Cubist's experimental antibiotics.
The calls bought Friday, which lock in the purchase price for the stock, are looking for CBST to gain roughly 6 percent or more by mid-April. Those options could be sold earlier at a profit in any rally before then, but they will expire worthless if the shares remain below the $45 strike price. (See our Education section)
The call buying made up almost all of Cubist's total option volume of 2,106, which is more than 11 times its daily average of just 184 contracts in the last month. Only 36 puts changed hands in the session, a reflection of the day's bullish sentiment.
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