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Option Clips: Ariad Pharmaceuticals, MannKind, and Kroger

Reviewing notable options activity on Ariad Pharmaceuticals, Inc., MannKind Corporation, and The Kroger Co.

by 3/28/2014 1:55 PM
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Two equities generating buzz on StockTwits today are oncology concern Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) and biopharmaceutical issue MannKind Corporation (NASDAQ:MNKD). Meanwhile, grocery chain The Kroger Co. (NYSE:KR) is also seeing unusual action in the options pits. Here's a look at how traders have been aligning their speculative bets today.

  • Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) is 6.6% higher at $8.10, as traders digest rumors that Jazz Pharmaceuticals plc (NASDAQ:JAZZ) was willing to pay over $20 per share to buy the firm. Against this backdrop, ARIA's short-term options are in demand, as evidenced by the stock's 30-day at-the-money (ATM) implied volatility (IV) of 77%, up 10.7% from yesterday's close. However, puts are the options of choice, with intraday volume running at 10 times the norm. Digging deeper, speculators are expecting ARIA to remain south of $9 in the short term, buying to open the April 9 and May 9 puts.

  • After initially rising more than 10% out of the gate this morning, MannKind Corporation (NASDAQ:MNKD) is bucking the broad-market trend higher, down 3.3% at $5.03, after the FDA raised questions about the company's inhaled diabetes drug (the regulators are expected to rule on Afrezza by April 15). The stock's 30-day ATM IV once again hit a new annual high earlier in the session, but has since dropped 10.9% to 282.7%. Overall options volume is running at six times the average intraday pace, with sellers circling the April 2 call, and "vanilla" option bears buying to open the weekly 4/4 4.50-strike put.

  • Finally, The Kroger Co. (NYSE:KR) is 0.5% higher at $43.85, bringing its year-to-date gain to 10.8%. Both calls and puts are trading at more than three times the norm, though calls are the contracts of choice on an absolute basis. Roughly 26,000 calls have changed hands, compared to just over 4,000 KR puts. However, most of the action isn't attributable to bulls, as all of the 11,825 May 46 calls traded have done so at the bid price, suggesting they were sold. Plus, volume has outstripped open interest at the strike, hinting at fresh initiations. By writing the calls to open, the sellers expect KR to remain south of $46 -- in uncharted territory for the shares -- through the close on Friday, May 16, when the options expire.


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