Auxilium Pre-Data Options Trading (AUXL)

Posted in Options 
January 8th, 2010

Auxilium Pharmaceuticals Inc. (NASDAQ: AUXL) is not your traditional options alert, but the trading is ahead of a conference presentation.  This has traded an odd spread that first traded for 2,500 contracts in a multi exchange sweep, and the trade has been emulated with more than 4,000 contracts trading.  Traders are buying the March $32.50 calls at the offer and selling the June $40 calls in a diagonal calendar spread that is bullish with shares at $29.50, trade costing $1 to put on that is profitable with shares above $35 in March, a 20% move from here.  Shares are currently near the lower end of its recent range, and the company will present at the JP Morgan Healthcare Conference on January 14th.  Auxilium is awaiting FDA approval of XIAFLEX for Dupuytren’s Contracture, expected soon.  Shares have a $42 target at Jefferies and there is a 10% short float, 10 days to cover.  Implied volatility recently touched near 1 year lows, making the trade a cheap way to take a bullish gamble in shares.  Data as of 2:21 PM EST.

Joe Kunkle,

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