Botox maker Allergan is getting ready to break resistance, and one investor is fine-tuning a position to take profits and maximize gains.
optionMONSTER’s Heat Seeker tracking program detected the purchase of 6,000 January 65 calls for $0.80 and the sale of 3,000 January 60 calls for $3.05. Volume exceeded open interest in the higher strikes and not the lower, indicating that the investor rolled a position into the higher strike.
AGN rose 2.44 percent to $61.83 in late morning trading and reached a new 52-week high of $61.94. The stock is attempting to break an old peak from September 2008, after which point the next resistance is likely to be around $69.
Rolling the calls forward allowed the investor to recover $435,000 of premium while doubling the number of options they own on the stock. The move also increases their likely gain on a percentage basis. If AGN rallies to $69, their position will appreciate about 400 percent.
If they had stayed in the January 60 calls, they’d only make about 200 percent and run the risk of losing money if the shares reverse lower.
AGN’s sales and profit beat expectations the last time the company reported results on Oct. 29.
Overall options volume in the name is almost 13 times greater than average today, with calls outnumbering puts by 145 to 1.
Related Botox Patient posts: Allergan’s Botox profit.Botox Patient: Allergan’s CEO comments on proposed new “Botax”Botox + DysportBotox around the worldMedical Spa RX: Botox from Canada
