Nektar Stock on the Mend Thanks to FDA News

The FDA granted "breakthrough" status for NKTR's melanoma treatment

Managing Editor
Aug 1, 2019 at 12:19 PM
facebook twitter linkedin


A big winner out of the healthcare sector today is Nektar Therapeutics (NASDAQ:NKTR), after the Food and Drug Administration (FDA) granted "breakthrough" therapy status to the company's lead cancer drug for melanoma. NKTR is up 5.1% to trade at $30.33 at last check, on track for its best day in two months. The FDA's decision is notable considering Nektar Therapeutics is set to report second-quarter earnings after-the-close next Thursday, Aug. 8. 

Looking at Nektar's earnings history, the stock has closed higher the day after earnings in six of the last eight quarters -- including a 7.5% bump in May, and a 6.1% gain last August. Over the past two years, the shares have swung an average of 9% the day after earnings, regardless of direction. This time around, the options market is pricing in a slightly larger-than-usual 9.6% swing for next Friday's trading. 

Today's rally comes one day after NKTR tagged an annual low of $28.04. The shares have spent 2019 carving out a channel of lower highs, with a breakout in early June contained by their 160-day moving average. The security is headed toward its fifth straight weekly loss, while July's 20% deficit was its worst month since October. 

Daily Stock Chart NKTR

In the options pits, there seems to be a heightened preference for calls. Specifically, NKTR's 10-day call/put volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) comes in at 3.55, which indicates calls outnumber puts by a more than three-to-one ratio in the past two weeks.

Traders looking to speculate on the drug stock's near-term momentum should consider options. Nektar's Schaeffer's Volatility Index (SVI) of 62% is in just the 16th percentile of its annual range. In simpler terms, short-term options are pricing in relatively tame volatility expectations for NKTR at the moment.

 

Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

 
Schaeffer's Daily Bulletin Offer
 


 


 
Special Offers from Schaeffer's Trading Partners