Bears Cheer Post-Earnings Slide From Ariad Pharmaceuticals, Inc. (ARIA)

Ariad Pharmaceuticals, Inc. (ARIA) is trading lower following its quarterly results, but that's actually a good thing for most traders on Wall Street

by Josh Selway

Published on Feb 23, 2016 at 3:23 PM
Updated on Jun 24, 2020 at 10:16 AM

Biotech stock Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) is in the red following the company's quarterly results this morning. This isn't bad news for everyone, though; many across Wall Street were betting against the drugmaker. Let's take a closer look at how traders have been approaching ARIA. 

Pessimism has been most apparent on ARIA outside the options pits, as short interest increased 6.6% during the two most recent reporting periods. Short sellers now control over one-fifth of the biotech stock's total float, and it would take them almost nine sessions to cover their bets, at average daily volumes. 

Although call buying has remained far more popular than put buying on an absolute basis at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), puts have been more popular than usual over the past 10 days. For instance, ARIA's 10-day put/call volume ratio across these three exchanges of 0.23 is higher than 83% of readings from the past 12 months. Echoing this, the stock's Schaeffer's put/call open interest (SOIR) of 0.76 lands in the 92nd percentile of its annual range. Said simply, short-term speculators are far more put-skewed than normal. 

The majority of analysts have also taken a bearish approach. Specifically, two-thirds say ARIA is a "hold" or "strong sell." 

All of this negative sentiment shouldn't come as too big of a surprise, though, since Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) has dropped over half its value since jumping to a two-year high of $10.07 in early August, last seen at $4.94. However, the stock's 10-day moving average appears to be acting as support, as it marked ARIA's intraday bottom. 

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