Call Buyers Swarm Soaring Coronado Biosciences, Inc. (CNDO)

A new partnership has Coronado Biosciences Inc (CNDO) option traders champing at the bit

Mar 19, 2015 at 1:03 PM
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Coronado Biosciences Inc (NASDAQ:CNDO) -- along with Amicus Therapeutics, Inc. (NASDAQ:FOLD) -- is one of the biotechs du jour, with the stock last seen 47% higher at $4.71, and just off a fresh annual high of $5.35. Against this backdrop, option bulls are swarming CNDO, scooping up short-term calls to gamble on even more upside for the shares.

Intraday call volume has spiked to 58 times the norm, with roughly 2,700 contracts exchanged thus far. It looks like traders are buying to open March and April 5 calls, betting on CNDO to keep barreling north of $5 in the near term. Specifically, the March-dated calls expire at tomorrow's close, while the soon-to-be front-month April calls expire at the close on Friday, April 17.

Prior to today's rally -- induced by news of a partnership to form Mustang Therapeutics, Inc. to develop its cancer cell therapy -- near-term option players were more put-heavy than usual. The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.83 stands higher than 95% of all other readings from the past year.

Echoing that, short interest accounts for 15.3% of Coronado Biosciences Inc's (NASDAQ:CNDO) total available float, representing more than two weeks' worth of pent-up buying demand, at the equity's average pace of trading. Should CNDO extend today's upward momentum, a short squeeze could add fuel to the fire. Likewise, just one analyst currently covers the security, leaving plenty of room for fresh initiations to bring more buyers to the table.

 

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