Options volume spikes for Ebola drug developers; Tekmira a top bet

Wed Oct 1, 2014 12:03pm EDT
 
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By Saqib Iqbal Ahmed

NEW YORK Oct 1 (Reuters) - Drugmakers with potential Ebola treatments saw a spike in U.S. options activity on Wednesday, as traders bet these companies would see more gains after the first case of the deadly virus was diagnosed in the United States a day earlier.

Options volume in the pharmaceuticals and biotechnology sector was heavy, driven in part by increased bullish betting on Canada's Tekmira, whose experimental drug TKM-Ebola has been used to treat patients with Ebola.

Shares of Tekmira Pharmaceuticals, the most advanced of the companies working on Ebola treatment, were up 19 percent at $25.15 in brisk activity, and trading in its options was triple its monthly average, according to options analytics firm Trade Alert.

Among the most active options were bets that Tekmira's U.S. share price would rise to at least $35 apiece before March 20.

There were 2,330 contracts traded so far Wednesday, and most of them were new positions, according to Thomson Reuters data.

Overall, Tekmira calls outnumbered puts by a ratio of 3:1.

Various other pharma companies, including BioCryst Pharmaceuticals Inc, Sarepta and NewLink Genetics, are racing to develop an effective treatment or vaccine against Ebola.

Implied volatility, a measure of the risk that big moves in a stock pose, was up for most of the companies with potential Ebola treatments in the works.   Continued...