Mylan Call Options Hot as Stock Hits New Low

It's been a rough stretch for Mylan NV (NASDAQ:MYL) stock, which is down more than 30% since its May 6 intraday peak at $28.46, due in part to last week's post-earnings bear gap. Options traders have remained hopeful -- and this bullish trend is continuing today, even as MYL stock sinks in sympathy with fellow generic drug stock Teva Pharmaceutical.

Diving deeper, Mylan has seen roughly 30,000 calls and 15,000 puts change hands today, more than four times what's typically seen at this point in the session, and volume pacing in the 98th annual percentile. Most active is the October 20 call, where more than 10,500 contracts have been exchanged.

Trade-Alert specifically calls out a block of 5,000 October 20 calls that was likely bought to open for $2.85 apiece, or around $1.4 million (number of contracts * premium paid * 100 shares per contract). This is the most the call buyer stands to lose, should MYL stock settle below the strike at October options expiration, while profit will accumulate on a move above breakeven at $22.85 (strike plus premium paid).

Today's call-skewed session just echoes a recent trend seen in MYL's options pits, with speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) buying to open 3.13 calls for each put in the past 10 days. The May 32.50 and June 30 calls are home to MYL's top two open interest positions, and data confirms buy-to-open activity at each short-term strike.

The last time MYL traded above $30 was ahead of a late-February bear gap, and the stock hasn't seen the north side of $32.50 since early December. Year-over-year, Mylan shares have shed 48%. And today, the security tagged a new seven-year low of $19.73, after several U.S. states filed a price-fixing lawsuit against TEVA -- sending its shares tumbling nearly 16%.