Beaten-down shares of Oncothyreon broke above a key chart level at the end of last week, and traders are betting that the drug maker is on its way to recovery by this summer.
More than 1,500 June 3 calls traded in a strong buying pattern on Friday, most of them going for $0.35, according to optionMONSTER's real-time Heat Seeker system. These are all new positions, as there was no open interest in the strike before the session began.
ONTY rose 5.31 percent to finish the session at $2.18, the first close above its 50-day moving average since October. Shares have been trading around the $2 level since gapping down from $4.50 on Dec. 19 after disappointing Phase III trial results for Stimuvax, a cancer drug that the firm is developing with Germany's Merck KGaA.
Oncothyreon is scheduled to present at Cowen's Annual Health Care Conference in Boston on Wednesday.
The calls bought on Friday lock in the price where the stock can be purchased no matter how high it might rise, carrying the potential to provide major leverage in a big rally. These options are looking for ONTY to gain more than 53 percent by mid-June but will expire worthless if they remain below the $3 strike price. (See our Education section)
The call buying pushed total option volume in the name to 2,603 on Friday, more than 5.5 times its daily average of just 461 contracts in the last month. Overall calls outnumbered puts by more than 8 to 1, a reflection of the session's bullish bias.
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