Options Traders Eye Rumored Takeover Target Pharmacyclics, Inc. (PCYC)

After trading modestly higher for most of the morning, Pharmacyclics, Inc. (NASDAQ:PCYC) has jumped 17.7% to $221.60 -- and earlier hit an all-time peak of $231.09 -- amid reports the drugmaker could be exploring a possible sale. Johnson & Johnson (NYSE:JNJ) and Novartis AG (ADR) (NYSE:NVS) are rumored to be among the potential suitors, the former of which just received a big payday to end a multi-year lawsuit with Boston Scientific Corporation (NYSE:BSX). The news has sparked a rush of activity in th equity's options pits, with total volume running at seven times what's typically seen at this point in the day.

Drilling down, eight of PCYC's 10 most active options reside in the March series, with the 200-strike call garnering notable attention. It appears as if a number of new positions are being purchased here, meaning speculators are gambling on PCYC to extend its lead north of the round-number $200 mark through the close on Friday, March 20, when front-month options expire. Delta on the call is docked at 0.79, suggesting a roughly 4-in-5 chance of an in-the-money finish.

From a wider sentiment perspective, it's been puts, not calls, that options traders have preferred. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), PCYC's 10-day put/call volume ratio of 1.21 ranks in the 92nd annual percentile. Simply stated, puts have been bought to open over calls with more rapidity just 8% of the time within the past year.

Even more telling of this put-skewed bias is the security's Schaeffer's put/call open interest ratio (SOIR) of 1.20. Not only does this show that put open interest outweighs call open interest among options set to expire in three months or less, but it rests at an annual high. In other words, speculative traders are more put-heavy now toward Pharmacyclics, Inc. (NASDAQ:PCYC) than they've been at any other point over the last 12 months.