Kite Pharma Inc (KITE) Options Traders Eye a Round-Number Breakout

Kite Pharma Inc (NASDAQ:KITE) call options are outpacing put options by an 8-to-1 margin this afternoon

Jun 6, 2016 at 2:13 PM
facebook X logo linkedin

Options traders are blitzing Kite Pharma Inc (NASDAQ:KITE), as the stock soars 13.8% to $59.26. Similar to Juno Therapeutics Inc (NASDAQ:JUNO), KITE stock is getting a lift from excitement surrounding the biotech's experimental chimeric antigen receptor T-cell (CAR-T) therapy -- which could get regulatory approval by next year. At last check, option volume has surged to six times what's typically seen at this point in the day, with calls outpacing puts by a nearly 8-to-1 margin.

In fact, calls account for nine of KITE's 10 most active options, with the majority of traders targeting the June 60 strike. It seems safe to assume new positions are being purchased here, as call buyers bet on a breakout above the round $60 mark by the next Friday's close, when front-month options expire.

Amid relatively low absolute volume, calls have been the options of choice on KITE in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security sports a top-heavy 20-day call/put volume ratio of 1.81. Plus, KITE's gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 0.48 suggests near-the-money call open interest more than doubles put open interest among options expiring in three months or less.

​However, with 6.1 million KITE shares sold short -- the most since mid-October -- it's possible some of the recent call buying could be a result of short sellers hedging their bearish bets with options. Regardless, now is the time to strike on the security's near-term options, considering its Schaeffer's Volatility Index (SVI) of 65% ranks in the 24th annual percentile. Simply stated, premium on the stock's short-term options is relatively inexpensive at the moment, from a volatility perspective.

Technically, the shares are still down 3.8% year-to-date. Nevertheless, today's surge has sent Kite Pharma Inc (NASDAQ:KITE) soaring through previous resistance in the $55-$56 region, and has the stock on track to close north of its 200-day moving average for the first time since Dec. 29.

KITE daily chart

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical  levels, and top economic stories straight to your inbox.



How to collect 1 dividend check every day for LIFE

Did you know you could collect 1 dividend check every day the market is open? You could also do it starting with just $605! For me, I'm collecting 70 dividend checks every quarter…which averages around 1.1 dividend checks every business day. There's no trading behind this... no penny stocks or high-risk investments. All you do is buy and hold and you're set. There's no set up required either. If you start buying the dividend stocks I show you today... you could collect 1 dividend per day starting as early as this week. Click here for all the details.