InterMune call volume pops ahead of FDA panel

NEW YORK, Feb 1 (BestGrowthStock) – Options activity on
biotechnology company InterMune Inc (ITMN.O: ) surged on Monday
amid increasing interest in the stock’s call options ahead of a
regulatory meeting on its pulmonary drug.

A U.S. Food and Drug Administration advisory panel is to
meet on March 9 to discuss InterMune’s new drug application for
pirfenidone, a treatment for idiopathic pulmonary fibrosis,
which is a scarring or thickening of the lungs. For details,
see [ID:nWEN9408]

InterMune shares were up 7 percent at $16.69 in afternoon
trade.

“We are seeing both buying and selling of the calls during
the first half of the session,” said WhatsTrading.com option
strategist Frederic Ruffy.

In the options market, volume was 14 times greater than the
recent average daily turnover, with about 38,000 puts and
15,000 calls traded, according to option analytics firm Trade
Alert.

Traders focused on the March $17.50 and $20 calls where
14,401 and 7,893 contracts changed hands, respectively.

“March $17, March $20 calls are bullish, not only because
they got the FDA review, but because investors believe that
things will go well at the meeting,” said Joe Kinahan, chief
derivatives strategist at TD Ameritrade.

InterMune puts were also active, notably the March $10 and
$12.50 strikes, where a combined volume of 7,138 contracts
traded.

Option traders are bracing for more turmoil in the already
volatile stock, reflected by a sharp rise in the stock’s
projected volatility, which measures the expected magnitude of
share price movement and is a key component of an options
price.

March option implied volatility stood at 210 percent while
April was at 185 percent and July at 151 percent — way above
the 26-week average of 92 percent, according to Track Data.

Investing Analysis
(Reporting by Angela Moon, Editing by Leslie Adler)

InterMune call volume pops ahead of FDA panel