By David Russell, reporter at OptionMonster

DUBLIN ( OptionMonster) -- Elan ( ELN) has been in the dumps since a massive collapse in 2008, but now the bulls are coming back.

OptionMonster's real-time tracking systems detected a surge of call-buying in the Irish drugmaker Tuesday as investors positioned for a springtime rally. The May 6s were the most active strike, trading more than 20,000 times against open interest of just 50 contracts. Premiums climbed from $1 to $1.30 throughout the session, but most of the large blocks priced at the lower end of that range.

Almost 6,000 May 7 puts were also sold for 40 cents, this time against previous positioning of just 20 contracts. The stock was trading for $6.90 when most of the puts crossed OptionMonster's monitors, so the options were in the money, which is noteworthy because it's a highly leveraged way to play for upside.

The shares ended the session with a 5.15% gain at $7.15, so those puts are now out of the money. If Elan stays above $7 or climbs further, those puts will dwindle to zero.

The stock has been battling its way higher since the late summer, although for the last three months has been consolidating those gains. Tuesday's session, with option volume 32 times greater than average and share turnover more than twice normal, suggests that it may be starting to attract interest once again.

The recent gains also seem to have improved Elan's technical position because its 50-day moving average is now above its 100-day moving average, and its 100-day moving average is above the 200-day moving average. That configuration is often necessary before a stock can advance.

Its 200-day moving average has also started to climb, another potentially bullish pattern that suggests the longer-term trend is turning upward.

There are also fundamental reasons why investors may be warming to Elan. While its loss was wider than expected the last time it issued results on Feb. 8, revenue was significantly ahead of consensus.

In January, the company announced a 7% price increase for its Tysabri multiple sclerosis drug, which accounts for more than 80% of its revenue. And last month, Elan announced that European regulators approved the first medicine that will use its NanoCrystal drug-delivery technology.

Russell has no positions in ELN.

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.