Option Volume Explodes On ImmunoGen, Inc. (IMGN) After Drug News

Positive drug developments and upbeat analyst attention have ImmunoGen, Inc. (NASDAQ:IMGN) calls in high demand

by Josh Selway

Published on Jun 1, 2015 at 11:05 AM
Updated on Jun 24, 2020 at 10:16 AM

Traders are rushing to ImmunoGen, Inc. (NASDAQ:IMGN) today, after the company announced its experimental ovarian cancer treatment appeared to have positive effects on patients in early testing. The shares have skyrocketed 63.7% to $14.70, and earlier hit an annual high of $14.75. Moreover, call volume is currently at 67 times the expected intraday pace, with the options making up eight of IMGN's 10 most active contracts.

The most popular option is the now in-the-money June 14 call, and data is suggesting buy-to-open activity. By purchasing the calls, traders are betting on extended gains above $14 before the contracts expire at the close on Friday, June 19.

This bullish bias is part of an ongoing trend in the stock's option pits. For example, IMGN's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio sat at 4.64 on May 12, but now registers at 34.37. This reading shows over 34 calls have been bought to open for every put during the past two weeks, and, what's more, it ranks higher than nearly four-fifths of similar readings from the past year.

The optimism in the stock's option pits coincides with its recent surge on the charts. Since touching a multi-year low of $5.34 on Dec. 23, IMGN has added over 175%. With today's gains, the shares are set to take out their 320-day moving average for the first time since March 2014.

Analysts, though, remain mostly skeptical. Of the 10 brokerage firms with coverage on ImmunoGen, Inc. (NASDAQ:IMGN), six say it's a "hold" or worse, while the average 12-month price target of $9.19 stands at a discount to current trading levels. However, it appears some analysts are beginning to change their tune. Specifically, Morgan Stanley upgraded IMGN to "equal weight" from "underweight," and doubled its price target to $10 from $5. Additionally, Canaccord Genuity and RBC raised their respective price targets to $20 and $15.


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