Endocyte, Inc. (ECYT) is a bio-pharmaceutical company that develops targeted therapies for the treatment of cancer and inflammatory diseases. One way to calculate how much a stock can move is to look at the ATM Straddle to get two Measured Move Targets. The ECYT ATM April 15 Straddle is priced at $6.80 implying the stock can move to either $21.80 or $9.20 by April expiration. Obviously, by the high implied volatility we can tell that there will be a drug announcement in April. One trader thinks the stock can move to $23.25 as we saw a trader buy ECYT April 22.5 calls for $.75.
Their Risk: $75 per 1 lot
Their Reward: Unlimited
Their Breakeven; $23.25