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By David Russell

Elan (NYSE:ELN) is drawing upside option activity ahead of the drug maker's earnings report tomorrow morning.

ELNThe Heat Seeker showed 9,545 February 6 calls trading Friday in a strong buying pattern for prices ranging from $0.65 to $0.80. Overall option volume in the name was 7 times greater than average, with calls accounting for 97 percent of the activity.

The Irish company will issue its quarterly results at a difficult time for its public image. Elan has been busy with damage control, first when its Tysabri multiple schlerosis drug was linked to brain infections and then when it retained part ownership in its corporate jet after firing 10 percent of its workforce.

The shares, however, have been bullish of late, breaking though resistance at $6.20 last month and now bouncing at their 30-day moving average (green line on chart). ELN closed last week at $6.63, up 0.15 percent on the day.

For the calls bought Friday to turn a profit, the stock would need to rise roughly 1.5 percent before they expire on Feb. 18.

Source: Bulls Pile Into Elan Ahead of Earnings