Bulls Charge Into Visa, PetroBras, Watson Pharma

Watson Pharmaceuticals: The manufacturer of generic and brand name pharmaceutical products received near-term bullish bets by options strategists positioning for the price of the underlying to appreciate ahead of January 2011 expiration. Shares in Watson Pharmaceuticals are currently up 0.50% to stand at $51.93 as of 1:25pm. Last week, Watson said it received FDA approval for its low dose, chewable oral contraceptive drug. Investors expecting shares in Watson to edge higher purchased more than 1,500 in-the-money calls at the January 2011 $50 strike for an average premium of $2.25 a-pop. Call buyers at this strike make money if Watson’s shares rally to a new 52-week high of $52.25 ahead of expiration day. Bulls also purchased some 1,490 calls at the higher January 2011 $55 strike for an average premium of $0.25 each. Investors holding these contracts stand ready to accrue profits should shares in the pharmaceuticals firm surge 6.4% over the current price of $51.93 to surpass the effective breakeven price of $55.25 by January expiration. The rise in demand for Watson’s call options helped lift the stock’s overall reading of options implied volatility 11.8% to 22.81% by 1:30pm.