NewLink Genetics Corp (NLNK) Option Bull Ups the Ante

One NewLink Genetics Corp trader rolled her bullish bet up and out

by Karee Venema

Published on Oct 15, 2014 at 3:21 PM
Updated on Apr 20, 2015 at 5:32 PM

Escalating fears over Ebola have proven detrimental to airline issues, but beneficial to biopharmaceutical stocks, such as NewLink Genetics Corp (NASDAQ:NLNK). In fact, the shares are up 25% today to $27.30, following reports Canada has licensed the commercial rights to its experiment Ebola vaccine to NLNK. Option traders, meanwhile, are showing a preference for calls, and are scooping up the contracts at a rate almost nine times the intraday average.

Short-term contracts are in high demand, too, as evidenced by the equity's 30-day at-the-money implied volatility, which has jumped 5% to 133.5% -- just 4 percentage points from an annual peak. A healthy portion of the day's activity occurred when two symmetrical blocks of 1,481 October 10 calls and November 13 calls traded near the bid and ask prices, respectively. With exactly 1,481 contracts currently in residence at the front-month strike, and not a single contract open at the back-month strike, it appears as though one speculator is rolling her bullish bet up and out one month.

From a wider sentiment perspective, long calls have been popular on a stock that's rallied more than 57% from its 11-month low of $17.32, tagged on Monday. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NewLink Genetics Corp's (NASDAQ:NLNK) 10-day call/put volume ratio of 7.10 ranks in the 71st annual percentile. Simply stated, calls have been bought to open over puts at an accelerated clip in recent weeks.


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