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Bulls think Valeant will keep rallying

Created on Tuesday, 14 February 2012 02:15

Category: US Markets

Valeant Pharmaceuticals has been an absolute monster stock for several months, and traders are betting that the run will continue throughout the year.

Bulls were going out in time yesterday, as more than 9,000 January 52.50 calls traded in a heavy buying pattern for $6 to $6.50, according to optionMONSTER's Heat

Seeker. The open interest at the beginning of the session was just 13 contracts, so these were clearly new position.

Vertex closed yesterday up 1.13 percent to $48.45 as shares attempt to hold support at their 50-day moving average. The stock is up more than 50 percent since hitting a 52-week low of $32.05 on Oct. 4.  

Earnings come out on Feb. 27 before the bell. For the calls bought yesterday to turn a profit, the stock would need gain roughly 21 percent by expiration in 11 months.

Overall option volume in the name was more than 4 times its daily average. Calls at all strikes outnumbered puts by 32 to 1, a reflection of yesterday's bullish sentiment.

(A version of this post appeared on InsideOptions Pro yesterday.)

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Courtesy Yahoo Financial News

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