Amylin Pharma: Calls Ride the Rally

Amylin Pharmaceuticals (AMLN) is roaring back from a four-month low today after signing a marketing deal with Japan's Takeda Pharmaceutical.

The shares rallied almost 11 percent to $12.24 in early afternoon trading, and call volume surged sixfold from Friday's level. New money flowed into the December 12.50 calls, which traded 2,267 times against open interest of 743 contracts. Large institutional-sized purchases for $1.10 and $1.15 accounted for most of the activity.

AMLN started the session down 25 percent over the previous three months. Takeda agreed to make an upfront payment of $75 million in exchange for worldwide development rights of AMLN's obesity drugs. On Oct. 20, management also raised its outlook for 2009, reducing its forecast loss.

The stock needs to climb about 10 percent by December expiration for today's calls to turn a profit. The November 12.50 calls were the most active strike in the session, with large trades for $0.65. Volume was below open interest.

Overall options activity in the name was triple the average level, with calls outnumbering puts by 3 to 1.

(Chart courtesy of tradeMONSTER)