Sepracor: Pfizer Rumors Spur Options Speculation (PFE, SEPR)

Ever since the FDA shot down Neurocrine Biosciences' (NBIX) Indiplon tablets, rumors concerning a possible Pfizer (PFE) and Sepracor (SEPR) partnership/merger have been flying left and right on Wall Street. Sepracor's call option volume of 42,447 contracts heavily outweighs the put volume of 5,132 contracts. The sudden rush of money into the June 60 calls, for example, suggests that speculators are positioning for a large upside event occurring over the next month.

Sepracor, which makes the insomnia drug Lunesta, has seen its top line explode over the last 12 months as a result of this new drug. Early last year, Bloomberg reported that Sepracor hired Morgan Stanley (MS) to explore a sale, but nothing ever came of it. Within the next 30 days, that might be an altogether different story.