|From: singhtelecom (Rep: 974)||Date: 11/27/2019 22:35|
|Forum: Spectrum Pharmaceuticals - Msg #705||Thread #674109960 (Rec: 0) |
|On 11/1, a trader bought 2,800 Jan 2020 $9 calls. On 11/15, there were over 11,000 Dec $10 calls purchased. Yesterday, the Jan 2020$9/$14 call spread opened 1,500X for $1.20. This repeat options activity comes ahead of phase 2 topline|
data due in December. More specifically, this data pertains to non-small cell lung cancer with exon
20 insertion mutation in EGFR or HER2. In addition to the bullish options flow, short interest has been
falling in recent months and now sitting near multi-year lows. That illustrates that traders are not
actively shorting the stock ahead of the data. Earlier today, B. Riley resumed coverage on the stock with
an $18 price target and named SPPI one of their top picks going into December.
Buying options in a biotech company ahead of data comes with a high amount of risk. However, it may
be worth considering a small position in this one. The December $10 calls have the largest position in
open interest, currently trading for $1.35. Since IV has been rising into the event (options are becoming
more expensive), it makes sense to consider a call spread such as the Jan $9/$14 call spread. That’s the
same spread that opened yesterday and that spread can be opened for about $1.20 - $1.30.
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