By Pete Najarian, co-founder of OptionMonster.

The biotech exchange traded fund ( IBB) is drawing strong options activity today as news ranging from mergers to government regulation continues to rock the sector.

More than 4,000 calls were bought for $0.35 at the April 70 strike in the first 90 minutes of trading this morning, four times the open interest, according to OptionMonster's tracking systems. The buying has extended to the June 70 calls as well.

Shares of the iShares Nasdaq Biotechnology ETF are up more than 4% in midday trading to $62.90, near the highs of the day but still some 30% below their 52-week peak. The index has been on a rollercoaster ride for months, rising with M&A activity and falling with the threat of increased regulatory controls of the industry along with the pharmaceuticals sector.

Just today, Gilead Sciences ( GILD) announced its intention to acquire CV Therapeutics ( CVTX) for $1.4 billion, a deal involving two companies in the IBB. Gilead is the ETF's second-largest holding, with an index weighting of 9.7 percent.

The writer has no holdings in the securities mentioned.

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