Drug News Excites Kite Pharma, Inc. (KITE) Option Bulls

Drug news has Kite Pharma Inc (NASDAQ:KITE) taking off

Jun 5, 2015 at 1:28 PM
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Unlike this sector peer, Kite Pharma Inc (NASDAQ:KITE) is surging once again today, on news the Moffitt Cancer Center treated the first patient in the clinical trial for the company's non-Hodgkin's lymphoma drug, KTE-C19. The shares were last seen 9.4% higher at $59.56, and volume has picked up in the options pits. By the numbers, more than 3,400 calls have crossed, compared to the expected intraday amount of 709. What's more, they're outpacing puts by a margin of almost 9-to-1.

In particular, traders have jumped on KITE's front-month options, with the June 60 and 65 calls leading all others. It seems as though traders are buying the contracts to open, betting on the shares to top $60 and $65, respectively, by the close on Friday, June 19, when the options expire. Delta on the lower-strike call has jumped to 0.52 from 0.27 at yesterday's close, while the higher strike has seen its delta move to 0.30 from 0.12 during the same time frame, thanks to today's gains.

It's not unusual to see calls outstrip puts by such a wide margin. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows more than eight KITE calls have been bought to open for each put during the past two weeks. Additionally, the stock's Schaeffer's put/call open interest ratio (SOIR) comes in at 0.61, meaning call open interest is higher than put open interest among options with a lifespan of three months or less. 

All this call activity has come despite the security's poor performance on the charts. Even after accounting for today's gains, Kite Pharma Inc (NASDAQ:KITE) has fallen 33.2% since touching a record high of $89.21 on Jan. 15. On the plus side, the stock could be seeing some support from its 20-day moving average, a level that acted as resistance throughout May. 


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