Inovio Pharmaceuticals (INO) has been high on the list of companies that traders have been speculating on as the race for a vaccine continues. While it may be 12 to 18 months away from being available for public use, that doesn’t mean that there isn’t opportunity right now as the probabilities of a positive outcome are reflected every day in the gyrations in the stock price.
INO not only has potential for creating a vaccine for COVID-19, it is also working on vaccines for HIV, Zika, Ebola, and MERS. While the profit potential is mixed among analysts, it doesn’t change the near-term potential as the news cycle for the virus continues to move stock prices of these companies. Although investors that have been riding the up and down cycle in recent weeks filed a class action lawsuit, it doesn’t appear to be dramatically affecting the stock price.
It’s with that introduction that we look at the unusual option activity of INO on Friday. The overall option activity was only about 33% above average on Friday but is was mostly call option volume for the 27 MAR 20 expiration. At one point a 4000 contract buy order was made on the $7 strike that executed between $0.95 to $1.50. That order amounted to around a $500K bet that the price would reach over $8 by the end of next week. In addition to that order, thousands of contracts were traded between $7 to $9, with close to 300 contracts trading at the $10 strike. Some of this interest could have been rolled form the 20 MAR 20 expiration.
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Action to Take: INO is a long opportunity with a $12 target and an exit on a close below $6. Speculators could consider the 27 MAR 20 $7 long call for around $1.70. That provides at potential return of $330 or almost 200% by expiration if the stock closes at $12.