What's Behind the MannKind Corporation Call Buying?

MannKind Corporation (NASDAQ:MNKD) is generating negative buzz this morning, as traders fret over recent news that top executives are dumping shares. At last check, though, MNKD was up 0.2% at $5.26 -- potentially good news for recent call buyers.

Specifically, during the last 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open nearly 17 calls for every put. The resultant call/put volume ratio of 16.91 ranks in the 97th percentile of its annual range.

However, it's possible these call buyers are short sellers in disguise. With nearly 35% of MNKD's float sold short, shorts may be hedging their bearish positions with long calls, in the event of an unexpected rally.

On the charts, MannKind Corporation's (NASDAQ:MNKD) fall has been fast and furious. So far this year, the stock has traded as high as $7.88 in early February, but has since plummeted 33% to its current perch. On a relative-strength basis, MNKD has underperformed the S&P 500 Index (SPX) by nearly 26 percentage points over the last two months.