Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) – Shares in drug maker, Vertex Pharmaceuticals, Inc., are soaring today, up better than 7% at $51.72 in early-afternoon trade, on news the biotechnology company agreed to test one of its experimental hepatitis C drugs with therapies from Johnson & Johnson and GlaxoSmithKline. Cambridge, Mass.-based Vertex is scheduled to report third-quarter earnings after the closing bell tonight. Options activity on VRTX this morning indicates one trader is preparing for shares in the name to near its highest level of the past 52-weeks in the months ahead. It looks like the trader purchased a roughly 2,500-lot Jan. 2013 $60/$65 call spread for an average net premium of $0.85 per contract. The position starts making money if Vertex shares surge 18% to trade above the average breakeven price of $60.85. Maximum potential profits of $4.15 per contract are available on the bull call spread should shares jump more than 25% to top $65.00 by January 2013 expiration. The shares last traded above $65.00 back on May 15th.
Barrick Gold Corporation (NYSE:ABX) – Options contracts that are among the most actively traded on gold mining company, Barrick Gold Corp., this morning suggest some traders expect shares in the name may avoid additional declines from the current level in the near term and could potentially rebound sharply by year end. Shares in the world’s largest gold producer are down more than 8.7% today at $36.96 as of 11:30 a.m. ET after the company reported third-quarter net income and revenue that missed consensus estimates. Traders expecting the price of the underlying to exceed $35.00 through November expiration sold the majority of the more than 6,500 puts in play at the $35 strike in the early going for an average premium of $0.20 apiece. Put sellers keep the full amount of premium at expiration in two weeks as long as shares settle above $35.00. Meanwhile, options strategists looking for shares in ABX to rebound picked up more than 3,000 calls at the Dec. $40 strike at an average premium of $0.69 per contract. Traders long the calls profit at December expiration if Barrick Gold Corp.’s shares jump 10% during the next seven weeks to top $40.69.
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