Vivus Pharmaceuticals (VVUS) is up $3.76 to $30.22 on surging volume of 28 million shares after the biotech won FDA approval for weight loss drug Qsymia. Shares had rallied 150 percent in the five months leading up to the decision. So, it’s possible that much of the good news was already priced into the shares. Yet, implied volatility in the options on the stock is down 55 percent to 59 now that the event risk has passed. Some investors are probably unwinding positions on the heels of the decision. July 30 calls, which are 22 cents in-the-money and expiring at the end of the week, are the most actives and also have the most open interest in the name. 10,078 traded against 24,038 in open interest. The contract is 22 cents in-the-money and trading for $1.10. Sep 23 and Jul 20 puts are the next most actives. Total volume in VVUS is 72,000 calls and 73,000 puts through 13:00 EDT.
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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.