Shares of generic drugmaker Mylan dropped for the third straight session yesterday but drew heavy upside options activity.
Mylan fell 2.62 percent to close at $15.59. The stock is up more than 270 percent from its 52-week low of $5.75 reached in October 2008 but has pulled back in the last week.
The option activity was concentrated at the November 17 contracts, where more than 10,000 calls traded. Most of them bought for the asking prices between $0.40 and $0.45, including one large print of 3,500 calls an hour into the session, according to OptionMonster's real-time tracking systems.
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Open interest at the strike was only 485 contracts, indicating that the buying represented newly opened positions, and the call volume has averaged grand total of 28 per day. Total calls at all Mylan strikes outnumber puts traded by nearly 9 to 1, a further indication of bullish sentiment in the name.
The stock would need to rise at least 12 percent by the November expiration for the calls to turn a profit.
The upside trading came a day after Mylan announced it had started selling a generic version of Sinemet, a treatment for Parkinson's disease, after recent approval from the Food and Drug Administration. Last week Standard & Poor's raised Mylan's credit rating to BB from BB-, saying that the company's outlook is stable.
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