Bull keeps faith even as Nektar slips
By Mike Yamamoto (mike.yamamoto@optionmonster.com) | optionMONSTER – Fri, Jan 25, 2013 5:47 AM EST
Nektar Therapeutics has cooled after rebounding sharply this year, but one trader apparently believes that the stock will resume its run in coming months.
optionMONSTER's Heat Seeker system shows that a trader sold 3,000 May 8 calls for $1.55 and
bought the same number of August 10 calls for $1.10. The May options were below previous open interest while the August contracts were above it.
This indicates that the investor is closing the May 8 calls, which are now in the money , and is rolling the position to the higher strike in August. The trader probably made a profit on the initial calls and is using those gains to buy another three months of upside exposure.
The new long calls , which lock in the price where the stock can be bought, are now looking for NKTR to trade above $10 by mid-August but will expire worthless if the stock is below that strike price. The move follows another roll from the May 8 calls on Jan. 16 . (See our Education section)
NKTR slipped 1.72 percent to $8.57 yesterday, continuing to drift lower since hitting resistance around the $9.50 level last week. The clinical-stage biopharmaceutical company plunged from above $10 in mid-October to below $6 less than a month later but then bounced sharply.
Yesterday's call roll made up almost all of the option volume in the name, which was about 6 times its daily average in the last month. Only 26 puts changed hands in the entire session, a further reflection of the day's bullish sentiment.
