Calls Run Hot as Cerus Corporation, ZIOPHARM Oncology Inc. Take Off

Blood safety specialist Cerus Corporation (NASDAQ:CERS) and drugmaker ZIOPHARM Oncology Inc. (NASDAQ:ZIOP) are among the healthcare stocks attracting option traders today

Feb 9, 2016 at 12:35 PM
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A number of healthcare stocks are moving higher today and receiving notable attention in the options pits. Among them are blood safety specialist Cerus Corporation (NASDAQ:CERS) and drugmaker ZIOPHARM Oncology Inc. (NASDAQ:ZIOP). Here's a closer look at the news impacting CERS and ZIOP, and how option traders are responding.

CERS just announced that it's entered into a multi-year agreement with the American Red Cross, which will use the device maker's Intercept blood system to reduce the risk of infection during transfusions. The deal follows a late-January study in which the company's technology effectively inactivated the Zika virus using ultraviolet light. As such, the stock has shot 9.8% higher at $6.25, putting it on pace for its largest single-day gain since April.

In options land, CERS calls are running at 10 times the expected intraday rate. By the numbers, over 8,600 calls have been exchanged compared to just 116 puts. Among the most active strikes is the August 7 call, where it appears a trader sold to open 1,865 contracts, expecting the shares to remain below $7 through August expiration.

Looking at activity among shorter-term option traders, calls are also extremely popular. Specifically, Cerus Corporation's Schaeffer's put/call open interest ratio (SOIR) of 0.10 indicates call open interest outstrips put open interest by a 10-to-1 margin among options expiring in the next three months. What's more, this ratio ranks in the low 14th percentile of its annual range.

Meanwhile, ZIOP is having a rock-solid day after earlier hitting an annual low of $4.56, last seen 2.6% higher at $5.06 as the company prepares to takes the stage at the BIO CEO & Investor Conference at 1 p.m. ET. Also, the company announced that a first patient has been enrolled in an upcoming trial for its advanced lymphoid malignancies treatment.

According to Trade-Alert, one option bull bought to open a block of 17,405 March 8 calls for $0.25 apiece -- or a total of roughly $435,000 (premium paid * number of contracts * 100 shares per contract). In other words, this ambitious bettor is counting on ZIOP toppling $8 -- a 58% premium to current levels, and territory not charted since early January -- by March expiration. Conversely, he may be a short seller hedging against such a sharp rally, given that nearly 45% of the stock's float is sold short.

Today's penchant for call buying is business as usual for ZIOPHARM Oncology Inc. option traders. During the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 9.05 calls for each put -- a ratio that ranks in the 73rd percentile of its annual range.

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