Options Activity in Pharmacia Reviewed

The Chicago Board Options Exchange said it was looking into unusual activity in Pharmacia Corp.’s options trading, which swelled late last week before Monday’s surprise announcement of a planned merger with Pfizer Inc.

It was the second time in one day that the world’s largest options exchange said it had opened a routine probe into unusual activity in options on a drug company’s shares.

Earlier Monday, the exchange said it was reviewing unusual trading in options on shares of drug maker Wyeth, which picked up early last week just before a study showed that a popular hormone therapy could raise women’s health risks. Wyeth’s shares subsequently plummeted.

A Pharmacia spokesman Monday declined to comment on the options activity.

An exchange spokeswoman declined to say when the probe was launched or whether it was linked to the unusual Pharmacia option turnover Friday, when an interexchange total of 10,471 calls and 2,671 puts changed hands, according to Options Clearing Corp. data.

The Pharmacia call activity that day was more than four times the average daily volume of 2,358 contracts, OCC data showed.

A call gives its buyer the right to buy 100 shares of the stock at a predetermined strike price by a set date.

Friday’s turnover in puts, which allow the buyer to sell the stock at a set price, was more than 2 1/2 times the average daily volume of 1,039 puts, said the OCC, which guarantees all trades on U.S. options exchanges.