Nektar bull buys time for a rally

optionMONSTER

Nektar Therapeutics has pulled back from a big move, and one investor wants to give it time to keep running.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,000 August 13 calls for $2.20 and the sale of an equal number of March 13 calls for $1. Volume was below open interest in the March contracts, which indicates that an existing long-call position was closed and rolled forward in time.

The investor paid $1.20 to make the adjustment and now has an additional five months to profit from a rally in the drug developer. The trader will also avoid the accelerating pace of time decay that will erode the value of the March contracts in the next six weeks. (See our Education section)

NKTR fell 3.30 percent to $12.02 yesterday. It rallied from $10 to $14 between November and January, only to retreat along with the rest of the market since then. The pharmaceutical company has several prospective compounds in various stages of development, and sales are expected to grow rapidly in coming years as new products hit the market.

Nonetheless, price action has been slowing in the biotechnology space recently. That could make some traders doubt a rally in the near term and explain why yesterday's puts were rolled forward.

Total option volume in Nektar yesterday was 9 times greater than its daily average for the last month, according to the Heat Seeker. Calls outnumbered puts by a bullish 32-to-1 ratio.


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