Options Action: Play On Bio Tech Firm

Elan is seeing extremely heavy options activity as its stock moves higher.

So far today 54,000 calls are trading against 18,000 puts, which amounts to 16 times the average turnover in December, according to OptionMonster's tracking systems. Much of the action is focused on the January 9 calls (ELNAI), where I show blocks as large as 1,192 contracts trading, all on the buy side.

ELN has soared some 70 percent since hitting its 52-week low of $4.99 on Nov. 21. Today it spiked from $8.20 to $9.10 in just 7 minutes before settling down to the mid-$8 level in midday trading.

Investment bank Leerink Swann issued a positive report about Elan yesterday, but shares in the neuroscience-based biotechnology company may have jumped today because of takeover rumors in the pharmaceuticals industry, which has seen M&A activity recently ahead of JP Morgan's influential health care conference next week.

• More Options Tips from Jon Najarian

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Jon 'DRJ' Najarian is a professional investor, CNBC contributor, and cofounder of .

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Disclaimer: I own stock and calls in ELN.