Drug manufacturer Teva Pharmaceutical (TEVA) has been on a tear, with shares soaring 67% over the past year. One trader sees shares continuing higher into the autumn.
That’s based on the September $18 calls. With 133 days until expiration, 7,964 contracts traded compared to a prior open interest of 171, for a 47-fold rise in volume on the trade. The buyer of the calls paid $0.71 to make the bullish bet.
Teva shares recently soared to a 52-week high just under $16 following its latest earnings. So shares would need to rally another $2, or 12.5%, for the option to move in-the-money.
The company beat on earnings expectations in the first quarter, and reported promising results from a study on one of its drug candidates. Both trends can likely push shares higher in time.
Following its jump higher, shares trade at about 6 times forward earnings, and right at 1 times their price-to-sales. Both metrics indicate that Teva has room to rally higher in the months ahead.
Action to take: Investors may like shares here, as they’re trending higher and have the momentum to keep doing so.
For traders, the September $18 calls have ample time to play out, and can likely move in-the-money in the coming months. Traders can likely see mid-double-digit profits.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.