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Bulls pile into Nektar Therapeutics

David Russell (david.russell@optionmonster.com)

Nektar Therapeutics has been trending higher, and traders cleaned up in the name yesterday.

optionMONSTER's Heat Seeker monitoring system detected a spike of buying in the September 12 calls late in the morning, mostly for $1.25 and $1.35. These long calls locked in the price where shares can be purchased in the drug developer, giving them potentially explosive leverage in a rally. (See our Education section)

That's exactly what happened yesterday: NKTR was up some 5 percent when the option activity hit, then climbed 13 percent to close the session at $12.69. The calls, by contrast, shot up more than 75 percent to $2.40.

The stock has been swinging widely since late 2011 while making steadily higher lows. Yesterday's bounce occurred around the same $11.10 level where it peaked in March and April, which could make some chart watchers think that it's in a bullish uptrend.

Volume approached 9,500 at the strike. Previous open interest was just 473 contracts, indicating that new capital was put to work.

Overall calls in the name outnumbered puts by an extremely bullish 52-to-1 ratio. Total option volume was 12 times greater than average.

(A version of this post appeared on InsideOptions Pro yesterday.)

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