"Two biotechs in our portfolio have seen an unusual amount of option activity in recent weeks/months," notes 20-year sector veteran Nate Pile. Here's the latest in Nate's Notes.

"The first one is Cubist Pharmaceuticals (NASDAQ: CBST), and the option trading here appears to be pretty much a bullish bet no matter how you slice it.

"Further, Cubist's stock has continued to climb in a manner consistent with what one would expect to see in the early stages of a bull market. Of course, I only consider these technical issues after being bullish based on the company's fundamentals.)

"On the other hand, there has been a tremendous amount of activity in both the puts and calls on MannKind (NASDAQ: MNKD), and thus the best we can say is that someone out there is counting on a big move of some sort, even if we can't tell for sure which way they are expecting the stock to move.

"MannKind's stock has come to life in recent weeks, while there has not been any real news to account for the price action. Huge (relatively speaking) blocks of both puts and calls have traded in recent days, mostly concentrated at the $7.50 and $10 strikes. 

"I emphasize that investors should keep in mind that the story behind is still quite speculative (and will remain so until Afresa approval is granted). Afresa is a rapid-acting insulin that has completed phase 3 clinical trials for the treatment of diabetes.

"To be sure, 'insider trading' is illegal, but having followed the biotech and biomedical space for twenty years now, I can tell you that it is not at all uncommon for 'someone to know something' the rest of us do not yet know.

"Indeed, it often pays to keep one's eyes peeled for signs that someone with access to more information than we have may be putting on a trade that is worth emulating (as is perhaps the case with both Cubist and MannKind right now).