Agenus Inc. (AGEN) Calls Hot as Stock Surges

Agenus Inc (AGEN) inked a deal with Incyte Corporation (INCY), sparking options activity

Jan 9, 2015 at 11:22 AM
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Among the latest biotech stocks making headlines (and technical headway) is Agenus Inc (NASDAQ:AGEN), which has skyrocketed 24.8% to flirt with $5.13, and earlier notched a new two-year high of $5.80, thanks to a development deal with -- and fresh investment from -- Incyte Corporation (NASDAQ:INCY). What's more, options players are gambling on more upside for AGEN, with calls flying off the shelves at roughly 40 times the typical intraday pace.

Most active is the now in-the-money January 2015 5-strike call, where more than 1,000 contracts have traded. Those buying the calls to open expect AGEN to extend its trek north of $5 through the next weeks, which represents the options' remaining shelf life. In light of AGEN's surge, delta on the call has more than tripled to 0.62 from 0.19 at yesterday's close, implying a roughly 62% shot of the contracts expiring in the money.

Today's affinity for calls is just more of the same for AGEN, as speculators on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open eight calls for every put during the past 10 weeks. What's more, short-term traders are paying a pretty penny to gamble on the drugmaker, as the security's Schaeffer's Volatility Index (SVI) of 195% sits just 15 percentage points from an annual high. In other words, AGEN's near-term contracts are expensive, on a historical basis.

Of course, some of that call buying -- especially at out-of-the-money strikes -- could be attributable to hedging activity among the shorts. Short interest accounts for 11.8% of Agenus Inc's (NASDAQ:AGEN) total available float, representing more than eight sessions' worth of pent-up buying demand, at average daily trading levels.


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