Traders Take To Coronado Call Options
by Option Review - October 1st, 2013 4:49 pm
CNDO – Coronado Biosciences Inc. – Shares in the biopharmaceutical company that develops immunotherapy biologic agents for autoimmune diseases and cancer increased as much as 7.0% to $7.50 on Tuesday, sparking a sharp increase in options activity on the stock today. Overall options volume on Coronado Biosciences is hovering just above 5,000 contracts as of the time of this writing, roughly three times the stock’s average daily options volume of around 1,500 contracts.
Front month calls are the most actively traded contracts by volume, with traders snapping up calls across several striking prices. More than 1,450 calls changed hands at the Oct $10 strike against open interest of 735 contracts. It looks like most of the volume was purchased for a premium of $0.63 each, thus positioning buyers of the $10 calls to profit if shares in CNDO surge more than 40% over today’s high of $7.50 to exceed the average breakeven price of $10.63 by October expiration. Around 2,200 calls traded at the higher Oct $12.5 strike, exceeding open interest at that strike of 1,755 contracts. Time and sales data indicates most of the $12.5 strike calls were purchased at a premium of $0.30 apiece. The Oct $12.5 calls may be profitable at expiration should the price of the underlying jump 70% from the current level to top $12.80.
CREE – Cree, Inc. – Shares in the maker of LED lighting products are up sharply on Tuesday, trading nearly 10% higher to $65.98 during the first hour of the session, after the stock was upgraded to ‘buy’ from ‘hold’ at Canaccord Genuity with an increased target price of $80.00 from $65.00. Goldman Sachs also reiterated its buy rating on the stock today.
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