Trader bought the December $40 call and sold the December $47.50 call 5,000x for a debit of $1.92. Maximum risk is $960,000, the total debit. Profit potential is limited to $2,790,000 with a move to $47.50 or more.
The trade is bullish, looking for a break above $42 to break even. With the recent sharp sell-off, shares are down about 20% and have reached 2008 lows. The chart below shows this.
The $37 billion generic drug maker, with its recent acquisition of Cephalon, trades 7x earnings, 1.5x book and 9.9x cash flow with 2.2% dividend yield. Short interest is down as well.
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No position at this time. Position declarations are believed to be accurate at time of writing but may change at any time and without notice.