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Option Clips: Merrimack Pharmaceuticals, Walgreen, and Marvell

Reviewing notable options activity on Merrimack Pharmaceuticals Inc, Walgreen Company, and Marvell Technology Group Ltd.

by 5/1/2014 12:57 PM
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Two equities generating buzz on StockTwits today are drugmaker Merrimack Pharmaceuticals Inc (NASDAQ:MACK) and pharmacy concern Walgreen Company (NYSE:WAG). Meanwhile, semiconductor provider Marvell Technology Group Ltd. (NASDAQ:MRVL) is also popular in the options pits. Here's a look at how traders have been aligning their speculative bets today.

  • Merrimack Pharmaceuticals Inc (NASDAQ:MACK) has skyrocketed 60.8% to $7.06 today, after notching a new annual high of $7.65 earlier in the session. The company this morning reported encouraging drug data for its experimental cancer treatment -- which bodes well for yesterday's option traders, who sent call volume soaring to a six-week high, according to data from Trade-Alert. In today's session, intraday put volume is running at 67 times the normal pace, with volume at the May 5 put exceeding open interest, hinting at fresh initiations. Plus, two-thirds of the front-month puts traded on the ask side, suggesting they were bought. However, considering MACK's rally today, the newly out-of-the-money puts may have been purchased by shareholders looking to lock in gains in the event of a pullback.

  • Walgreen Company (NYSE:WAG) is also exploring new highs ahead of Monday's monthly sales report. The equity tagged a record peak of $70.07 earlier today, but has since trimmed its lead to 2.9% to flirt with $69.84. Intraday call volume is running at 14 times the norm, and is outpacing put volume by a margin of more than 7-to-1. Most of the action is attributable to what appears to be a roll-up of a bullish position. Specifically, it looks like the speculator cashed in nearly 32,000 July 62.50 calls for $8.04 apiece, and then bought to open July 67.50 calls for $4.57 apiece.

  • Finally, Marvell Technology Group Ltd. (NASDAQ:MRVL) is 0.6% higher at $15.96, but one trader is gambling on more short-term upside for the shares. Call volume is trading at 14 times the normal rate, and the stock's 30-day at-the-money implied volatility is 5.7% higher at 38%. Digging deeper, it seems one speculator may have upped the bullish ante by selling to close 6,657 May 16 calls, and simultaneously buying more than three times the number of May 17 calls, on expectations for MRVL to surmount $17 by the close on Friday, May 16, when front-month options expire. While the stock hasn't been north of the strike since March 2011, delta on the calls stands at 0.19, implying a roughly 1-in-5 shot of an in-the-money finish at expiration.


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