Option Traders, Analysts on the Right Side of AERI

A number of drugmakers are having big days, including Aerie Pharmaceuticals Inc (NASDAQ:AERI). The stock topped out at record peak of $35.56 earlier, as buyers rush in ahead of the firm's expected release of Phase III drug data for its glaucoma treatment -- a theory echoed by one analyst at Stifel Nicolaus. Additionally, RBC Capital Markets waxed optimistic that the company could be a potential takeover target down the road. At last check, the shares were up 6.5% at $34.41, most likely music to the ears of option traders.

In fact, over the course of the past 10 sessions, speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 9.33 calls for every put. Echoing this call-skewed bias is AERI's front-month gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 0.82, which indicates near-the-money call open interest outweighs put open interest among options expiring at this Friday's close.

Those purchasing the equity's near-term options are currently willing to pay a pretty penny. Specifically, AERI's Schaeffer's Volatility Index (SVI) of 132% rests higher than all other readings taken in the past year. Simply stated, premium on the security's short-term options is pricing in relatively inflated volatility levels.

Outside of the options pits, sentiment is fairly optimistic. All three analysts covering the shares maintain a "strong buy" recommendation, while the average 12-month price target of $41.33 stands in territory yet to be charted. This glass-half-full approach around the Street shouldn't be too surprising, though, given Aerie Pharmaceuticals Inc's (NASDAQ:AERI) long-term technical backdrop. Over the past 52 weeks, the equity has roughly doubled in value.