Options Boil on Biotech Buyout Rumors
Cubist Pharmaceuticals is rebounding from a three-month low, and some bulls are looking for a sharp surge higher amid buyout rumors.
OptionMonster's tracking systems detected unusual buying of the November 17.50 calls, with institutional-sized purchases pricing at $0.45 to $0.75. Volume surged to 3,882, more than four times existing open interest.
CBST stock rose 1.69 percent to $17.74 in early afternoon trading but is down about 10 percent in the last three months. On Oct. 16, the biotechnology company reduced the sales forecast for Cubicin, its only product on the market.
The shares are climbing today amid unconfirmed takeover rumors and after bouncing off an old support level around $16.70. They need to climb roughly 4 percent by expiration for the calls purchased today to turn a profit.
The company is scheduled to participate in the Lazard Capital Markets 6th Annual Healthcare Conference on Nov. 18, one day before the calls expire.
Overall options volume in CBST is five times greater than average today, with calls outnumbering puts by 37 to 1.
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David Russell is a reporter and writer for OptionMonster.