CNDO – Coronado Biosciences Inc. – Shares in the biopharmaceutical company that develops immunotherapy biologic agents for autoimmune diseases and cancer increased as much as 7.0% to $7.50 on Tuesday, sparking a sharp increase in options activity on the stock today. Overall options volume on Coronado Biosciences is hovering just above 5,000 contracts as of the time of this writing, roughly three times the stock’s average daily options volume of around 1,500 contracts.
Front month calls are the most actively traded contracts by volume, with traders snapping up calls across several striking prices. More than 1,450 calls changed hands at the Oct $10 strike against open interest of 735 contracts. It looks like most of the volume was purchased for a premium of $0.63 each, thus positioning buyers of the $10 calls to profit if shares in CNDO surge more than 40% over today’s high of $7.50 to exceed the average breakeven price of $10.63 by October expiration. Around 2,200 calls traded at the higher Oct $12.5 strike, exceeding open interest at that strike of 1,755 contracts. Time and sales data indicates most of the $12.5 strike calls were purchased at a premium of $0.30 apiece. The Oct $12.5 calls may be profitable at expiration should the price of the underlying jump 70% from the current level to top $12.80.
CREE – Cree, Inc. – Shares in the maker of LED lighting products are up sharply on Tuesday, trading nearly 10% higher to $65.98 during the first hour of the session, after the stock was upgraded to ‘buy’ from ‘hold’ at Canaccord Genuity with an increased target price of $80.00 from $65.00. Goldman Sachs also reiterated its buy rating on the stock today.
Overall options volume on the stock is approaching 14,500 contracts as of 10:30 a.m. ET, roughly twice CREE’s average daily options volume of around 7,750 contracts. Trading in calls on the stock are more active than puts, with the call/put ratio hovering near 2.5 as of the time of this writing.
Fresh interest in November expiry puts suggests at least one trader is bracing for shares in Cree to potentially pullback by expiration next month. More than 800 puts traded at the Nov $65 strike early in the trading day versus previously existing open interest of 37 contracts. Time and sales data indicates most of the volume was purchased at an average premium of $4.60 each. The puts may be profitable at November expiration in the event that CREE shares decline more than 8.0% to breach the breakeven point on the downside at $60.40. Cree is scheduled to report first-quarter earnings after the close of trading on October 22nd.
