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Biogen Idec Inc (BIIB): Call Volume Picks Up as Stock Moves Higher

Biogen Idec Inc's strong price action catches the eye of call buyers

by 1/13/2014 9:47 AM
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Biogen Idec Inc (NASDAQ:BIIB) has seen accelerated call activity in its options pits of late, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Over the past two weeks, the stock has chalked up an ISE/CBOE/PHLX call/put volume ratio of 1.86, which ranks in the 69th percentile of its annual range. In other words, calls have been bought to open over puts at a faster-than-usual clip.

It's a trend that was witnessed on Friday, with calls crossing the tape at more than three times the average daily pace. The most sought-after position was the weekly 1/31 280-strike call, where all of the 1,501 contracts traded did so on the ask side. Implied volatility ticked higher and open interest rose over the weekend, signaling buy-to-open activity. With BIIB currently perched at $297.41, these calls are not only in the money, but they have also surpassed the breakeven mark of $295.37, which is the strike plus the volume-weighted average price of $15.37.

This bullishly skewed bias isn't surprising, considering BIIB has more than doubled in value on a year-over-year basis. More recently, the equity has tacked on 3.2% since Biogen Idec Inc announced a research collaboration with clinical stage biopharmaceutical concern Sangamo Biosciences, Inc. (NASDAQ:SGMO) last Thursday, and hit a record peak of $302.95 right out of the gate today.

Meanwhile, the lifetime of the aforementioned calls resides in the time frame when Biogen Idec Inc (NASDAQ:BIIB) is tentatively scheduled to report fourth-quarter earnings. The company has exceeded analysts' expectations in six of the past eight quarters, with the stock posting an average gain of 1.3% in the subsequent session.


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