Novavax, Inc. (NVAX) Traders See Another Multi-Year High Ahead

Novavax, Inc. (NVAX) calls are trading at seven times the average intraday pace

Feb 17, 2015 at 10:53 AM
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Novavax, Inc. (NASDAQ:NVAX) tacked on 10.4% last week amid news the company is beginning early stage testing of its Ebola vaccine on humans. The equity is extending this momentum today, up 3% at $9.06 -- after earlier hitting a 12-year peak of $9.23. Options traders are responding in kind, with calls crossing the tape at a rate seven times the intraday average, and outpacing puts by a nearly 19-to-1 margin.

Drilling down, NVAX's March 9 call has seen the most action, with all signs suggesting buy-to-open activity. The volume-weighted average price (VWAP) for the calls is $0.76, making at-expiration breakeven for the call buyers $9.76 (strike plus VWAP) -- which would mark another multi-year high for the shares. Profit will accumulate north of here, while losses are limited to 100% of the premium paid, should NVAX settle south of the strike at the close on Friday, March 20, when the options expire.

From a wider sentiment perspective, today's accelerated call activity marks a change of pace in the equity's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, NVAX's 10-day put/call volume ratio of 0.19 ranks in the 78th annual percentile. In other words, puts have been bought to open over calls at a faster-than-usual clip in recent weeks.

Looking at the charts, today's optimism among options traders more closely aligns to the equity's technical backdrop. Similar to a number of its sector peers, Novavax, Inc. (NASDAQ:NVAX) has been in rally mode since Ebola began dominating the newswires last October. Specifically, the shares have more than doubled since their Sept. 30 close at $4.17.

Daily Chart of NVAX Since September 2014
 

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