Shares of MannKind have seen some wild swings recently, and one institution-sized trader is making a big bet that the drug company will snap back up by 50 percent before mid-May.
OptionMonster's real-time tracking systemdetected a large block of 7,000 May 7.50 calls bought for $2.50 yesterday. The in-the-money calls dwarfed the average volume of 17 per day at the strike and were 19 times the open interest of 366 contracts, thereby reflecting newly opened positions.
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MannKind rose 1.37 percent to $6.67 yesterday. For the May 7.50 calls to turn a profit, the stock would need to at least rise 50 percent to $10 or more before the options expire on May 14.
That may seem like a huge gamble at first blush, but shares of the biopharmaceutical company have been on a roller-coaster ride since Labor Day, soaring 67 percent to over $12 in the first three weeks of September but then plummeting to $5 less than a month later. Not surprisingly, implied volatility spiked to 274 percent by mid-October.
The company reported a narrower-than-expected loss i its third-quarter earnings report on Nov. 2. MannKind's next scheduled event is a presentation at the Lazard Capital Healthcare Conference on Nov. 17 along with other pharmaceutical firms such as Alkemes, which is also seeing bullish options activity.
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Mike Yamamoto is an analyst and writer for OptionMonster.