ABC - AmerisourceBergen Corp - Shares in AmerisourceBergen are up 2.4% today and nearly 30% year to date, but options in play on the stock suggest one or more traders are bracing for the price of the underlying to potentially pull back during the next couple of months. Shares are currently hovering around $55.00 as of 12:45 p.m. ET, helped higher by an upgrade to 'Outperform' from 'Market Perform' at Leerink Swann yesterday. The most actively traded options on ABC are the Aug $50 puts, with upwards of 18,000 contracts traded thus far in the session against open interest of just 160 contracts. Time and sales data suggests much of the volume was purchased for an average premium of $0.88 each, thus positioning buyers to profit should shares in ABC drop more than 10% from the current level to breach the average breakeven point on the downside at $49.12 by August expiration. Shares in AmerisourceBergen last traded below $49.12 in March.
VNDA - Vanda Pharmaceuticals, Inc. - Far out of the money call buying on Vanda Pharmaceuticals today indicates some traders are positioning for shares in the name to extend gains in the near term, with the stock up more than 18% on the session at a new three-year high of $11.94 as of 12:30 p.m. ET. The stock moved up sharply today after hedge fund, Baker Bros. Advisors, LLC, disclosed in a 13G filing a 13.99% stake in the company, roughly double the number of shares held by the fund as of the end of March 2013. Shares in VNDA have rallied approximately 120% since mid-May. Options players betting the price of the underlying has more room to run ahead of June expiration snapped up several hundred calls at the Jun $13 and $14 strikes on Tuesday morning. It looks like traders picked up around 500 calls at the $13 strike for an average premium of $0.65 each, and purchased some 300 lots at the higher $14 strike at an average premium of $0.40 apiece. Traders long the calls stand ready to profit at expiration next week should shares in Vanda rally another 14% and 21% to top average breakeven prices of $13.65 and $14.40, respectively.
DMND - Diamond Foods, Inc. - Bullish options purchased on Diamond Foods yesterday ahead of the company's third-quarter earnings report after the close on Monday are generating sizable overnight paper profits for some traders today, with shares in the name up as much as 11.3% to $19.53 on Tuesday morning, the highest level since November of 2012. Traders yesterday picked up around 3,000 calls at the Jun $17 strike for an average premium of $0.65 apiece, preparing for a more than 5.0% upside move in the price of the underlying by June expiration. The value of the call options has roughly tripled since Monday morning to $2.20 each as of midday in New York.