Bears Pounce on Struggling Regulus Therapeutics Inc. (RGLS)

Regulus Therapeutics Inc (RGLS) was placed on the short-sale restricted list

Feb 9, 2015 at 12:01 PM
facebook twitter linkedin

Unlike sector peer Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN), Regulus Therapeutics Inc (NASDAQ:RGLS) is getting whacked today, off 7.7% at $15.56, after the company reported that two patients relapsed after receiving its hepatitis C drug in a study -- roughly one month after saying it would fast-track the development of the treatment. The stock has since been placed on the short-sale restricted list. In the options pits, RGLS puts are crossing at four times the normal intraday pace, as traders look for alternative ways to place bearish bets.

The most popular put is the February 15 strike, which it seems most traders are buying to open. These speculators are hoping for the equity's technical woes to push it below $15 by the close on Friday, Feb. 20, when front-month options expire.

It was already clear that traders had their doubts on the security. Just in the past month, short interest increased close to 25%, and it now accounts for over 30% of RGLS' float. At the stock's average daily trading pace, this represents over seven days' worth of pent-up buying demand.

Interestingly, analysts don't have the same outlook on the shares. In fact, all four covering brokerage firms deem the stock a "strong buy." Also, its consensus 12-month price target of $27.00 stands at a 73.5% premium to current levels -- and in territory yet to be charted.

From a technical perspective, Regulus Therapeutics Inc (NASDAQ:RGLS) has struggled the past few months. In early November, the stock hit a record high of $25.60, but has since lost over 39%.


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners