Options Activity Heats Up In King Pharma (KG, ABT)

Posted in Options 
August 4th, 2009

King Pharmaceuticals Inc. (NYSE: KG) volume exploded on August $10 calls with nearly 4,000 trading before 10:30 AM as a rumor that Abbott Labs (NYSE: ABT) is looking at the Company for a $16.00 offer.  Implied volatility initially turned higher from 91% to 98%.  King shares are cheap on most metrics and it trades just 5X cash value with solid drug prospects, despite some recent FDA rejections.  King will report earnings before the open on August 6th and with a 2.28B market cap, this name could definitely be in play.  Large lots are being bought offer side, showing institutional interest.

-JOE KUNKLE, OPTIONSHAWK.COM

Update: as of 10:48 AM EST we have seen over 5,900 contracts trade hands in the AUG-$10 CALLS versus a prior open interest of 2,789 contracts.

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