Surge in 2021 call buying.
On Friday, over 1,980 contracts traded on a January 2021 $15 call option on Nektar Therapeutics (NKTR). With a prior open interest of 156 contracts, this represents a 16-fold surge in volume.
With shares of the company currently trading around $17, the option buyer is about $2 in-the-money per $6.60 contract. As such, the option should move dollar-for-dollar higher with shares.
- This Industry is Exploding Faster Than It Has in 15 Years
1,700 people are moving to Central Florida every week.
And the numbers are only increasing as more and more people are banking the end of the pandemic drawing near.
And one company, which just received critical approval to list on a prestigious public exchange, could be on the verge of going on a huge run.
Nektar Therapeutics develops drug candidates for cancer, auto-immune disease, and chronic pain in the United States. The company has collaboration agreements with many larger pharmaceutical companies.
Thanks to some high-profile misses on new drugs, shares of the company are down a staggering 73 percent in the past year, making this call option bet a clear gamble that prices will bounce from here.
Action to take: With nearly 550 days for the trade to play out, we’re a fan of the January 2021 strike date on call options right now. The in-the-money nature of the trade shows that the buyer is looking to play a somewhat safe option trade.
If shares were to surge to, say, $100, a price point they’ve traded in the past, the option would be worth $85, about a 12-fold increase from where shares trade today. Conversely, if the company continues to struggle, the option limits the loss from $17 per share to essentially $6.60.