Bearish Betting Ramps Up on Kite Pharma, Inc. (KITE)

Kite Pharma Inc (KITE) is sharply lower on drug data


Published on Apr 20, 2015 at 1:35 PM
Updated on Apr 20, 2015 at 5:32 PM

Kite Pharma Inc (NASDAQ:KITE) is taking it on the chin this afternoon -- and bucking broad-market tailwinds -- after data from a CAR-T therapy trial showed zero tumor response. At last check, shares of the drugmaker were down 9.9% at $58.62, and on the short-sale restricted list. Meanwhile, traders looking for an alternate way to bet bearishly on the stock are running to its options pits.

Drilling down, intraday put volume on KITE is at nearly three times what's expected. Buy-to-open activity is transpiring at the May 55 put, suggesting traders see more downside ahead. Specifically, the buyers anticipate KITE will breach $55 by the close on Friday, May 15, when the newly front-month series expires.

Another group of skeptical bettors look like they're selling to open KITE's May 70 call. In so doing, the speculators expect the shares will remain south of $70 through expiration.

It's not just options traders showing a lack of confidence toward KITE. In fact, during the last two reporting periods, short interest on the stock soared 52.1%, and now makes up almost 15% of its total available float.

On the flip side, the brokerage crowd is very bullish toward Kite Pharma Inc (NASDAQ:KITE). Each of the four analysts tracking the shares have handed out a "strong buy" recommendation, and the equity's consensus 12-month price target of $83.17 stands at a 42% premium to current trading levels.

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