Large call spread in drug firm Dynavax


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One investor is looking for a rally in Dynavax Technologies, an obscure drug developer that has been drifting lower since early in the year.

optionMONSTER's Heat Seeker tracking system detected the purchase of 5,000 August 2.50 calls for $0.85 and the sale of an equal number of August 5 calls for an average premium of about $0.06. There was no volume in either strike when the session began.

The trade resulted in a cost of about $0.79. Known as a bullish call spread, it will earn a profit of 216 percent if DVAX closes at or above $5 on expiration. (See our Education section)

The stock hasn't traded that high since March 2008, when it lost more than half its value in single session. Yesterday's option trader is apparently looking for the shares to fill that gap.

DVAX fell 0.78 percent to close at $2.56 yesterday. It rallied from $2 to $3.50 between December and mid-January after reporting positive results from a Phase 1 trial of its N8295 compound, an ingredient
in a potential flu vaccine, only to drift lower since then.

The shares have recently been finding support at their 200-day moving average, which could make some chart watchers think a rebound is imminent.

Overall option volume was 67 times greater than average yesterday, with calls accounting for more than 99 percent of the activity.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Options

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