Cart (0)
business newsMedical Mergers: Just What the Doctor Ordered?
Speculative options activity indicates risk capital may be returning to market.
PRINT
 |
|
Editor's Note: The following was posted in real time on our premium Buzz & Banter. It's being shared here for the benefit of the Minyanville community.
Word of possible combinations among medical and pharma companies is driving some speculative option activity.
Rumors that Baxter (BAX) is stalking Stryker (SYK) (a joint replacement maker) have caused a spike in call volume in Stryker. The most active strikes are the April $35 and $40 call, and the May $40 call. In total, over 12,000 contracts have traded against prior open interest of 9,000 in the 2 front months.
Shares of Allergan (AGN) are up over $6 to $50 on word it's in talks with GlaxoSmithKline (GSK). In Allergan, over 30,000 calls have traded compared to just 3,000 puts. The most active strikes are the April $50 and $55 calls, and May $55 calls, which all have volume exceeding the prior open interest.
Mergers, even if they're somewhat defensive in nature, are generally a positive sign. And speculative trading, in which people use options to bet on possible mergers, can be healthy on the margins, as it indicates some risk capital is coming back into the market.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
