Nektar Therapeutics reports earnings next Thursday
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.
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.