Amgen (AMGN) saw a large spread trade at 11:11am Tuesday, as 3,950 January $60 calls were bought at $0.84 and 1,975 January $62.50 calls were sold at $0.34 for a $1.34 debit on the back-ratio spread. The trade is bullish in price, net 0.40 Delta, and also long volatility with a net 0.09 Vega. It appears that the trade was financed via the roll of 1,975 January $50 calls at $7.03. Implied volatility sits at 25%, 52 weeks lows, and below historical volatility of 29%, so the bullish volatility and price bet makes sense. There was also a buyer of 1,250 January 2011 $60 straddles, another bullish bet on volatility. Shares have built a new base filling the gap to $52 and are trending sharply higher here. There is a major convergence of EMAs around $58 that will be a key level.

Amgen shares are known for being very cheap as a growing BioTech Giant at 11X earnings, 10.65X cash flow, and 4X cash value. Shares slid from mid-October after its post menopausal Prolia drug was delayed by the FDA, a key to its future growth. Amgen should provide the FDA with updated Prolia indications shortly, and was recognized yesterday at the Scrip Awards for Best New Drug and Best Pipeline. As a date for Prolia nears the IV in Amgen shares should see quite a boost, possibly back to 37% pre-Prolia delay levels.