Cell Therapeutics calls busy ahead of Xyotax data
Wed Mar 2, 2005 04:07 PM ET
CHICAGO, March 2 (Reuters) - Investors were piling into the call options on Cell Therapeutics Inc. (CTIC.O: Quote, Profile, Research) on Wednesday, amid speculation the biotechnology company's clinical trial data for lung cancer drug Xyotax would be positive, one options analyst said.
The company could not immediately be reached for comment.
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Cell Therapeutics calls busy ahead of Xyotax data
Shares of Seattle-based Cell Therapeutics ended 8.6 percent higher at $10.49 on the Nasdaq on Wednesday.
"Cell Therapeutics traded down after earnings Monday, but today's action is speculation on the drug tests being positive," said Jon Najarian, chief market strategist at PTI Securities, an online options and securities broker based in Chicago.
Xyotax links paclitaxel, the generic version of the cancer drug Taxol, to a substance that binds to tumors, allowing higher levels of the chemotherapy agent to be trapped in the tumor while reducing the level affecting healthy tissue.
"Traders say the company confirmed for them the release date of early March rather than mid-March, which explains the heavy volume in March options," Najarian said.
Cell Therapeutics said on Tuesday that trial results would be announced in the first half of March.
Chief Executive James Bianco said in a statement that the company was analyzing the results of three phase III trials of Xyotax in lung cancer for the potential submission of a U.S. Food and Drug application later this year.
Among the most active options were the calls that give the right to buy the stock at $10, $12.50 and $15 by mid-March.
By late Wednesday, a total of roughly 91,433 calls and 11,642 puts traded on the company across the U.S. option exchanges, outpacing Tuesday's combined tally of 77,083 contracts, according to market research firm Track Data.
A big chunk of the call volume was in the March 12.5 calls which traded 22,846 contracts, compared with open interest of 26,265 contracts. In the March 15 and March 10 calls, a total of more than 23,000 calls changed hands.
"Investors were bidding up these calls as demonstrated by explosive volatility in all three strikes. They were buying these calls on the hope that would be positive trial results of Xyotax," Najarian said.