If you’ve seen the action in Avanir Pharmaceuticals Inc (AVNR) today, you’ll know that insider trading is alive an well in America. And the SEC continues to do little to nothing about it. They are about as useful as Rob Ford as Mayor of Toronto. Of course, that’s a good thing if you follow unusual option trades, because then you can profit too. Friday’s big option buy became Monday’s big jackpot winner with respect to Avanir Pharmaceuticals Inc (AVNR).
We didn’t have time to write about the two unusual call buys in Avanir Pharmaceuticals Inc (AVNR) on Friday afternoon, but we did email the trade out to our newsletter. You can sign up for unusual option alerts on the right side menu.
On Friday afternoon we alerted our newsletter list to two call buys in Avanir Pharmaceuticals Inc (AVNR). In the first one, a trader bought just 943 of the October $8 AVNR calls, paying just 45 cents. Then a few minutes later, a trader bought 1,500 Avanir Pharmaceuticals Inc (AVNR) December $7 calls for the low, low price of $1.25. These trades stuck out like a sore thumb, they were very unusual for this company.
So what’s happened since Friday afternoon? Well, before the opening Avanir Pharmaceuticals Inc (AVNR) announced positive results from it’s phase 2 clinical trial of their product to treat agitation in Alzheimers patients. Coincidence? I think not. You can see the effect of that news on the share price, and of course those golden call options.
As of 11:55 am, Avanir Pharmaceuticals Inc (AVNR) is trading at $10.89, up a measly $4.15, or 62 percent. AVNR hit an earlier high of $11.38 though, and will likely surpass that later today as it gets it’s second wind. And what of those options that were scooped up on Friday afternoon?
The AVNR October $8 calls that were bought at 45 cents are currently bidding $3.00, and asking $3.40, with the last trade at $3.38. So that trader that bought 943 contracts has a current paper profit of just over $276,000….so far. Not bad for less than a day’s work.
The AVNR December $7 calls, that were bought at $1.25 on Friday afternoon are now bidding $4.10, and asking $4.70, with the last trade at $4.55. That trader who bought 1500 contracts is sitting on a profit of $495,000. Half a million in less than a day.
So how do these kinds of trades happen? Think about the possibilities.. It could be an employee of Avanir Pharmaceuticals Inc (AVNR). An employee that is involved in the writing of the press release, a scientist involved in the clinical trial, or an executive of the company that knows the press release is coming. Of course, you can’t rule out an employee of the FDA either. But wait, an FDA employee wouldn’t trade on their inside knowledge of clinical trial announcements, would they?
Of course, we’ll never know who profited handsomely from these Avanir Pharmaceuticals Inc (AVNR) calls bought Friday, because the toothless, archaic SEC will never investigate this obvious case of insider trading. It’s just one of thousands of insider options trades carried out each and every month.
So there’s no point in fighting insider trading, your best option is to follow the insider trading and profit from it. Just sign up for our newsletter on the right and we’ll send you alerts to unusual options trades that signal this insider action.