Chiron (NASDAQ:CHIR) is a global pharmaceutical firm focused on developing products for cancer and infectious diseases. The company commercializes its products through three primary business units: blood testing, vaccines and biopharmaceuticals. Blood Testing develops and commercializes a range of blood safety products used by the blood banking and transfusion medicine industry. Vaccines offers more than 30 vaccines including flu, meningococcal, travel and pediatric vaccines. Biopharmaceuticals discovers, develops, manufactures and markets a range of therapeutic products.
Shares of CHIR soared Wednesday, reaching levels not seen in five months after British regulators allowed the company to resume production of its flu vaccine, ending a lengthy suspension that caused widespread shortages in the United States. Chiron says it expects to begin producing Fluvirin immediately and also hopes to receive marketing clearance from the FDA, which will soon conduct its own comprehensive review of the facility. The company's goal is to have vaccine available for the flu season starting this fall; a critical step in Chiron's much-anticipated return to the U.S. influenza vaccine market.
The current technical indications suggest there is reasonable buying support near the sold (put) strike at $35 and today's upward trend should continue in the absence of any additional negative news. Traders may be able to improve the potential profit in the position by targeting a higher credit initially, to take advantage of any consolidation in the underlying issue.
PLAY (speculative - bullish/credit spread):
BUY PUT APR-32.50 CIQ-PZ OI=3874 ASK=$0.30
SELL PUT APR-35.00 CIQ-PG OI=3089 BID=$0.55
INITIAL "NET-CREDIT" TARGET = $0.30-$0.40
POTENTIAL PROFIT (X 5 contracts) = $150
RETURN ON INVESTMENT (max) = 14%
COST BASIS = $34.70
LOSS-LIMIT/EXIT POINT = $35.50 (cons) - $34.70 (aggr)