Options Traders Extending Out to September in VIVUS (VVUS)

VIVUS Inc. (NASDAQ: VVUS) was trying to recover this morning and briefly spent some time in positive territory after an obvious concern for shareholders that the FDA is not quite as ready on an unconditional basis to approve Qnexa as a pill to fight obesity.

Currently shares are down 4% at $22.00 on more than 11.8 million shares.  What has been rather amazing, and perhaps amusing, is the flurry of options trading.  With the FDA extending the review period by 90 days this moves out the options trading schedule considerably.  At NOON EST we have seen more than 20,000 put options trade hands and almost 55,000 call options trade hands.  On an absolute basis, this is about 7-times the normal trading volume in the options contracts.

Options traders are now having to go all the way out to September-2012 to get the proper options exposure that will cover July.  The lion’s share of the options trading is in the Call options as well.  The options will likely soon get July and/or August expirations but the September call options data today alone exceeds what was the entire open interest for the options contracts that month.  To show how expensive the options are with five months of time value, the September 2012 $27 Calls cost $4.75 and that requires a $31.75 breakeven price if you just look at the intrinsic value upon the September 21, 2012 options expiration date.

JON C. OGG