Arena Pharmaceuticals (ARNA) is rallying today and implied volatility in the options on the stock is up sharply amid high call volume after the European Medicines Agency accepted the biotech’s Lorcaserin as a weight loss drug. ARNA is up 57 cents to $2.98 and its best levels since September 2010 on 27 million shares traded, which is 10X the typical volume for the first two hours of trading in ARNA. Meanwhile, 18,000 calls and 6,880 puts traded on the stock. While Apr 3 calls are the most actives, with 2,300 traded, the flow is scattered across a variety of Apr, May, Jun and July puts and calls with strikes ranging from 2 to 6. Meanwhile, levels of implied volatility have surged 48 percent to 162. The FDA has an NDA resubmission date for Lorcaserin of May 10.
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Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.