Bullish option traders are piling into Valeant Pharmaceuticals as its shares reach all-time highs.
OptionMonster's tracking systems detected the purchase of about 2,100 October 105 calls yesterday, led by a large print of 1,355 contracts that went for $3.35. Volume was more than 9 times the previous open interest at the strike, indicating that this is fresh buying.
Calls lock in the price where shares can be purchased, offering potentially significant leverage in a rally. Investors also use these options to limit the amount of capital at risk if the shares reverse lower. But the Valeant calls bought yesterday will expire worthless in mid-October if the stock remains below the $105 strike price.