This is interesting CVTX:
U.S. Options-CV Therapeutics implied volatility up
CHICAGO, Oct 23 (Reuters) - Implied volatility stayed high on Tuesday in options on biopharmaceutical company CV Therapeutics Inc. (NasdaqNM:CVTX - news) as premium buying continued, possibly in anticipation of another big move in the stock.
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``Everybody is buying premium. They have been buying November for quite a while,'' said a market maker in the option at the Chicago Board Options Exchange. ``Implied vols are normally 70-75 percent. November is up to 150 percent.''
He said a few players had bought the November 45/50 strangle, purchasing both the November 45 puts and the 50 calls in the expectation that the stock will swing sharply either up or down before November options go off-the-boards Nov. 16.
An American-style call option gives its buyer the right to purchase the underlying stock at a specific strike price any time during the option's life. A put conveys to its buyer a similar right but to sell the underlying stock.
He also noted some buying of the near-the-money November 45 puts against stock on Tuesday.
The stock's one-month historical volatility stood at around 50 percent.
Implied volatility, which measures as a percentage how much the options market thinks the stock price will move during the option's life, has been high for the last couple of trading sessions in the option, and options volume also had begun to pick up again.
By late afternoon on Tuesday, about 945 calls and 1,390 puts had changed hands on stock of the Palo Alto, California-based company, which on Oct. 16 reported a smaller third-quarter loss than Wall Street analysts had expected.
That options volume compared with average daily options volume during the last 20 trading sessions of about 1,235 contracts, according to Track Data figures.
``There's an announcement coming out about a Phase III trial of ranolazine,'' the CBOE market maker added. ``I assume they (premium buyers) are expecting a pretty big move in the stock.''
Louis Lange, chief of executive of CV Therapeutics, said during a conference call Oct. 16 after earnings that the company will release results from the latest Phase III trial of its experimental heart drug ranolazine on Nov. 14 at the American Heart Association meeting in Anaheim, California.
He also said the company is on track to file in the third quarter of next year an application at the U.S. Food and Drug Administration for ranolazine.
Near Tuesday's close, the November 45 puts were up $1.60 at $7.40 on combined interexchange volume of about 1,386 and open interest of 6,350. The November 50 calls lost 70 cents to $4.80 on combined interexchange volume of about 410 contracts and open interest of 294 contracts.
CV Therapeutics stock expanded losses late Tuesday and near the closing bell was down $2.79 a share at $44.95 on Nasdaq market volume of 1.06 million shares. |
