Medicines Co (NASDAQ: MDCO) volatility spikes on hope for patent extension and 7/25 EPS.

• MDCO is a developer of products to improve acute hospital care and Angiomax; a treatment to clear restricted blood vessels near the heart.
  
• MDCO will announce EPS on July 25th.
  
• RBC Capital says: "It appears that an amendment to the Senate version of the pending Patent Reform Act contains language granting the USPTO discretion to accept late filings for patent extension. This gives MDCO a potential path to gaining patent extension beyond its 2010 expiration."
  
• MDCO August option implied volatility of 78 is above its 26-week average of 43 according to Track Data, suggesting larger price fluctuations.

Caterpillar (NYSE: CAT) volatility elevated after EPS of $1.24.

• CAT reported second-quarter sales and revenues of $11.3 billion and a profit of $823 million.
  
• Smith Barney says: "Overall, stock is going to get hit hard today as earnings power is back to 'believe me' story about operational performance."
  
• CAT overall option implied volatility of 30 is above its 26-week average of 25 according to Track Data, suggesting larger risk.

Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.