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Bulls Make Fast Money in Halozyme

By David Russell of OptionMonster
 
 
NEW YORK -- Halozyme Therapeutics (HALO) spiked higher Wednesday after announcing the appointment of a new CEO, and traders made a quick profit on the move.
 
OptionMonster's trading scanners detected the bullish action right after the market opened with a print of 5,000 January 15 calls purchased for the ask price of 45 cents. The buying continued throughout the session, as OptionMonster co-founder Jon "DRJ" Najarian pointed out on CNBC's Halftime Report Wednesday, and finished with more than 13,800 contracts priced all the way up to $1.35,  a gain of exactly 300%. Open interest in the name was a mere 279 contracts at the start of the day, clearly showing that new positions were initiated.
 
Long calls lock in the price where traders can buy a stock, allowing them to cheaply establish an upside position with limited risk. The contracts can provide major leverage if a rally ensues -- as seen in the tripling of premiums Wednesday -- but can also expire worthless if shares remain below the strike price.
 
Halozyme shares surged 16.6% Wednesday to close at $14.75, just 2 cents off their session high. The drug developer closed the previous session right at its 50-day moving average.
 
Total option volume in HALO topped 29,600 contracts Wednesday, 19 times its daily average for the last month. Overall calls outnumbered puts by a bullish 11-to-1 ratio.
 
Russell has no positions in HALO.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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