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Reata Pharmaceuticals Options Hot as Shares Skyrocket

Andrea Kramer

The shares of Reata Pharmaceuticals Inc (NASDAQ:RETA) have skyrocketed 46.7% to trade at $147.57, and earlier touched a record high of $149.80, thanks to strong data on the company's degenerative neuromuscular disorder treatment. RETA stock is pacing for a fourth straight gain and its biggest one-day surge since July 2018, and several analysts are rushing to hike their price targets. What's more, RETA options are on fire already.

Specifically, Reata's experimental drug omaveloxolone met the main goal of a mid-stage study to treat Friedreich's Ataxia. Just last week, the pharma firm reacquired the rights to the drug from AbbVie (ABBV) for territories outside the U.S., sparking the aforementioned win streak for RETA shares. As such, the equity is pacing for an October gain of nearly 85%.

In light of the positive drug news, Baird upped its price target on Reata Pharmaceuticals stock to $162 from $105, and said the company's other drug, bardoxolone, has blockbuster potential. Meanwhile, Citigroup went even bigger, hiking its price target on RETA to $241 from $194.

While absolute volume remains light, the equity has already seen close to 750 call options change hands in the first 45 minutes of trading -- 18 times the norm, and already surpassing RETA's average daily call volume of 400 contracts. Meanwhile, close to 500 puts have crossed the tape -- nine times the norm. Most active are the December 160 and deeper out-of-the-money October 200 calls.

Reata Pharma stock could be getting a boost from a short squeeze, too. Short interest represents nearly 14% of the security's total available float, and would take nearly 14 sessions to repurchase, at RETA's average pace of trading.