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Why call sellers are targeting Nektar

By: optionMONSTER
Posted: 1/11/2012 3:47:00 AM
Referenced Stocks: NKTR

One investor apparently thinks that the easy money has already been made in Nektar Therapeutics.

optionMONSTER's monitoring systems detected the sale of more than 5,000 May 7 calls for $0.40. Volume was 39 times open interest in the strike.

By writing calls, the investor is agreeing to sell shares of the drug developer for $7 if they push above that level on expiration. Including the credit earned, the sale price would be $7.40.

He or she probably owns the stock and is using that income as a hedge , taking some profits from NKTR's recent run higher. (See our Education section)

NKTR rose 6.94 percent to $6.16 yesterday and is up 15 percent in the last month. Management is scheduled to present at the JP Morgan Healthcare Conference at 11:30 a.m. ET today.

Chart watchers may also think that upside is limited at about $7 because that was an area where the stock bounced and consolidated in June and July before continuing lower.

The call selling pushed total option volume in NKTR to 5 times greater than average in yesterday's session.