How Celldex Therapeutics, Inc. (CLDX) Bulls Placed Winning Bets

Friday's call buyers are cheering Celldex Therapeutics, Inc.'s news-induced rally


Published on Nov 17, 2014 at 10:27 AM
Updated on Apr 20, 2015 at 5:09 PM

Celldex Therapeutics, Inc. (NASDAQ:CLDX) has popped nearly 28% out of the gate to trade at $18.12, on encouraging brain tumor drug trial data, as well as subsequent price-target hikes at Roth Capital (to $43 from $40) and Cowen (to $26 from $22). The brokerage firms also reiterated their respective "buy" and "outperform" ratings. Taken as a whole, this is good news for Friday's call buyers.

Diving into the details, options traded at five times the expected rate on Friday, and CLDX's 30-day at-the-money implied volatility jumped 13.6% to 79.7% -- signaling elevated demand for short-term strikes. Looking more closely, the two most active options expire at the end of this week -- namely, the November 14 and 15 calls, where a total of 6,394 contracts were exchanged.

The majority of the volume at both strikes crossed at the ask price, and open interest rose over the weekend, indicating buy-to-open activity. In other words, the traders gambled that CLDX would topple the respective strike prices by week's end -- something that has already come to fruition, thanks to this morning's bullish gap.

In fact, Friday's Celldex Therapeutics, Inc. (NASDAQ:CLDX) traders are already staring at potential paper profits. Specifically, the November 14 call buyers paid a volume-weighted average price (VWAP) of $0.84, and the bid price on this contract is currently $3.60. Similarly, the November 15 call buyers shelled out a VWAP of $0.73, and the bid is now $2.70.

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