If you think biotech stocks aren’t a risky proposition, take a look at Clovis Oncology CLVS – NASDAQ. In the first few months of the year, CLVS gained 67%. But over the last two months, it’s given back nearly all of it.
Can it reverse back higher? Whoever picked up 2,000 CLVS July 55/70 bull call spreads earlier today thinks so.
At $4.25 per spread, this trade cost $850,000. To pay off, CLVS needs to increase 29% to the break-even price of $59.25 by expiration.
This trade will achieve its maximum value at the short strike at $70 (+54%), wherein the returns top $2.15 million. Watch for pending results from a drug trial likely coming in July to be the necessary catalyst.
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