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Option Activity Alert: Call Buying Climbs on Biogen Idec Inc.

Bullish bets are popular, despite the equity's gruesome technical performance

by Elizabeth Harrow (eharrow@sir-inc.com) 11/9/2009 1:15 PM

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Calls have been the option of choice lately on Biogen Idec Inc. (BIIB: sentiment, chart, options). The stock sports a hefty 10-day International Securities Exchange (ISE) call/put volume ratio of 6.72, as speculators on this exchange have bought to open nearly seven times more bullish bets than bearish during the past two weeks. This ratio ranks higher than 91.7% of other such readings taken during the past year, as calls have rarely been purchased over puts at a faster pace.

BIIB SOIR In fact, on Friday alone, traders on the ISE bought to open 2,002 calls on BIIB, compared to just 97 puts. The day's most active strike was the November 50 call, where 9,535 contracts crossed the tape. Not far behind was the November 45 call, where 5,621 contracts changed hands. Open interest rose at both strikes over the weekend, confirming that traders added new calls here on Friday.

In fact, BIIB's November 45 call is continuing to draw a crowd in today's session, with 2,150 contracts trading by midday. Implied volatility on this strike was up 0.8% at last check, which points to rising demand for this at-the-money call.

Meanwhile, BIIB's Schaeffer's put/call open interest ratio (SOIR) confirms the apparently upbeat bias revealed by recent ISE option volume. The stock's SOIR is now resting at 0.56, with calls nearly doubling puts among options set to expire within three months. This SOIR ranks higher than only 14% of comparable readings taken during the past 52 weeks, suggesting that short-term speculators have rarely been more bullishly aligned.

BIIB open interest In the front-month series, last Friday's most popular option strikes are the center of attention. Peak call open interest of 9,738 contracts can be found at the November 50 strike, while another noteworthy accumulation of 9,429 contracts lies at the November 45 call. This configuration reveals that front-month call players are split between playing BIIB's at-the-money 45 strike, and the narrowly out-of-the-money 50 strike.

On the put side, the November 45 strike carries peak open interest of 5,535 contracts. Like their call-trading counterparts, put players apparently feel an affinity for at-the-money options on BIIB.

Elsewhere, short sellers have recently closed out a large number of bearish bets on the biotech stock, with short interest tumbling by 7.7% during the past month. Now, short interest accounts for 3.1% of the equity's float.

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Option Activity Alert: Call Buying Climbs on Biogen Idec Inc.

Bullish bets are popular, despite the equity's gruesome technical performance

by Elizabeth Harrow (eharrow@sir-inc.com) 11/9/2009 1:15 PM

BIIB

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