Both equities sport attractively priced short-term options
Pharmaceutical concerns Sarepta Therapeutics Inc (NASDAQ:SRPT) and Amarin Corporation (NASDAQ:AMRN) have recently retreated from new highs. However, both stocks are approaching key levels that could signal a bounce. Below, we'll dive into how SRPT and AMRN have been faring on the charts, and see why history indicates now may be a good time to bet on the shares' next leg higher.
SRPT Near-Term Options Attractively Priced
Sarepta stock has pulled back from its February highs above $155. The pharma name was down 2.6% at $123.22, at last check, and just came within one standard deviation of their 70-day moving average, after an lengthy stint above the trendline.
There have been seven similar retreats to this moving average over the past three years, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. After these signals, SRPT shares were higher one month later by 24.98%, on average, and were positive 71% of the time. From SRPT's current perch, a similar surge would place it at $154 -- in line with its late-February highs.
Short interest on the stock grew 3% during the most recent reporting period, and now accounts for a healthy 14.6% of SRPT's total available float. At the security's average daily trading volume, it would take shorts nearly six days to buy back their bearish bets, should the equity once again rebound off familiar support.
In terms of option premiums, SRPT's look attractively priced at the moment. Specifically, the security's Schaeffer's Volatility Index (SVI) of 51% stands in the 16th percentile of its annual range. In other words, near-term options are pricing in relatively low volatility expectations.
AMRN Shares Could Find a Floor
AMRN is down 0.8% at $18.59 in afternoon trading, eyeing its sixth close in the red over the past seven trading days. The shares have already lost more than 8% this week alone, but things may be looking up, as the pharma concern nears a historically bullish trendline.
Amarin stock just came within one standard deviation of its 50-day moving average, after an extended stretch above the trendline. This signal has occurred five times in the past three years, and has preceded an average one-month gain of 12.55% for the shares. Further, AMRN was positive 80% of the time a month after signals. From the security's current perch, a similar surge would place it at $20.92.
As with Sarepta, Amarin's short-term options look attractively priced. Near-term options are pricing in relatively low volatility expectations, as the stock sports an SVI of 64%, just 4 percentage points from an annual low.