Amarin (AMRN) - Option Traders Nail It, Strike Gold

Amarin (AMRN) announced very positive Phase 3 ANCHOR Trial Results this Morning for AMR101 and is setting up to open more than 60% higher.

Amarin is a name that has been coming up on my option scans for a couple months now. Traders were mostly active in June with the Q2 data release expected and traders not wanting to be in May and have the data released after May expiration. However, recently it became clear that the data would come in May as May IV jumped to 196% and June is at 168.58%.

If you take a look at the June call open interest the numbers are astounding, 26,912 June $7.50 calls, 24,886 June $9 calls, 34,896 June $10 calls, 16,016 June $12.50 calls, and 23,886 June $15 calls. Almost all of this open interest has built in bullish trades, most notably was the sales of the June $5 puts, 30,365 in open interest, to purchase the June $10/$15 call spreads, and quite a few institutional sized trades in recent months. On March 10th more than 5,000 June $9/$15 call spreads, and more than 5,000 June $10/$15 call spreads were bought to open. On March 21st a trader sold 3,000 June $5 puts to buy 3,000 June $9/$11 call spreads.

I also recently updated on my website on the Option Radar Freebies that on April 12th a trader bought 4,500 May $9/$13 bull call spreads at $1.30.

I put out a Options Radar note to clients on 2/23 when there was hot action, noting:

"Amarin (AMRN) options were busy on the day with shares in an 8 week consolidation, finding support at the 50 day EMA, and ready to make a run higher it appears. IV30 was up 6.6% on the day as 11,549 calls traded and 3,882 puts, 5X daily call volume and continued bullish activity in June, this time the June $9/$12.50 bull call spread bought a total of 3,000X in two trades at $0.90 on the CBOE. There was some smaller action in June $9 puts that amounted to 2,545 trading, already heavy open interest in June from a bullish 3 way trade where the $5 puts were sold to buy the $10/$15 call spreads back on 2-3. The $961M drug maker was started a Buy with a $12 target at Jefferies on 2-2 and a break above $9 would likely target that move to $12. Amarin will present at the Citi Healthcare Conf. on March 2nd and the RBC Healthcare Conf. on 2-2 as well. On January 11th Bloomberg reported that Amarin had a dozen parties interested in acquiring the Company. On February 2nd the Company hired Paul Huff, who will be key in evaluating strategic partnerships and commercialization of AMR101. Investors are awaiting ANCHOR Phase 3 study results in Q2, expected to be a big mover as seen with the 127.34% June IV."

It will be interesting to see where shares close today, as many will see these news as encouraging for a potential buyout bid. I picked up on unusual call action back in November before the big gap higher and made some clients a bunch of money, and now once again, option traders were right on point with Amarin, flooding into bullish positions the past few months.

Disclosure: Long May $9 Calls (Likely Close Partial Today)