Someone bet big in the options market that Puma Biotechnology would be a winner in the days before a positive drug trial sent its stock soaring.
Whether the trading on July 15 is suspicious or not, the report showing a Puma drug's success against breast cancer in a late stage study clearly surprised some Wall Street analysts. Stifel reportedly had predicted a "grim" outlook for the drug, called neratinib, and Cowen said the report showed suprisingly positive data.
"It could be a biotech fund taking that big shot. The timing's great though," said OptionsMonster co-founder Jon Najarian, who pointed out options activity and called it "fishy." The stock was trading at $216 at mid-morning Wednesday, up 159 points or 242 percent. (Click here for the latest price.)
Here's a note from Najarian, a CNBC contributor and "Fast Money" trader:
PBYI Announces Positive Top Line Results from Phase III PB272 Trial in Adjuvant Breast Cancer (ExteNET Trial)
Shares closed sub $60 now over $205!!
The attached data from our HeatSeeker shows someone bought the August 75 calls 1,000 times for $7.45. That would be a $745,000 investment to own shares at $75.
Against this they sold 1000 of the August 100 calls for $2.61, generating $261,000 credit from that sale.
Net investment was thus $484,000 to control PBYI from $75 to $100. So on paper the buyer has a profit of $20.16 or $2,016,000.
Into ASCO it averaged 800 calls per day. Since then its been even more anemic, except for July 15th (one week ago) when it traded 3,600 calls.
Now Puma Biotech barely traded 1600 calls the day after they presented some positive results at ASCO, so I find it FANTASTIC timing that someone decided to jump in with both feet just days ahead of such a market moving release.
Here is a breakdown from last Monday - Today of call volumes in PBYI
7/14 700 contracts
7/15 3600 contracts
7/16 1350 contracts
7/17 1250 contracts
7/18 1600 contracts
7/21 1700 contracts
7/22 400 contracts
—By CNBC's Patti Domm