Last week optionMonster reported that someone sold 9,150 January call options on Ziopharm Oncology (ZIOP) on Thursday with a strike price of $10, while 7,000 January call options with a strike price of $7 were purchased the same day. Presumably this spread contract was executed by the same buyer(s), who evidently feels (or hopes) strongly that ZIOP’s share price will rise above $7 within the next three months. Ziopharm is a holding in the Breakthrough Tech Profits “Special Situatons” portfolio as a play on the rapidly advancing cancer immunotherapy field.

The optimism in ZIOP’s near-term future prospects conveyed by this trade immediately carried over to the stock market, with its share price jumping more than 10% the same day. However, recently there has not been any particularly good news released by the company to justify this level of optimism, nor has it been the subject of an analyst upgrade since early August when Wells Fargo raised it to ‘Market Perform’ from ‘Underperform’, which is not exactly a ringing endorsement of the stock.

However, Ziopharm is scheduled to release its next set of quarterly earnings – and associated forward looking statements – during the first week of November, so perhaps this large options transaction is a blind wager that the news will be better than expected. If that is the case, then that’s a pretty gutsy move since each options contract represents 100 shares of stock. That means the 7,000 call contracts control 700,000 shares of ZIOP, which at a current share price of $5.40 equates to roughly $3.85 million worth of stock.

Assuming the investor in question is not a billionaire with an unrequited gambling addition, it is reasonable to wonder what the motivation is for a trade so far out of the money (below the strike price) and for so many call options. Specifically, is this person in possession of some form of meaningful information – insider or otherwise – that the rest of us aren’t that suggests ZIOP is about to take off? And if so, does it involve a potential buyout, favorable trial results, or some other event that would explain an expected jump of 50% in its share price in less than 90 days?

As I have stated previously regarding Argos Pharmaceuticals (ARGS), I believe 2017 will be the year that the strongest cancer immunotherapy R&D firms will be acquired by their big pharma brethren to offset declining profits from traditional medical treatments. If so, then perhaps this particular investor believes ZIOP will be among the first to go.