3 Biotechs on the Move: FOLD, ARIA, and AST

It's another volatile day in the U.S. equities market, as traders digest reports of stock market investigations overseas -- as well as central bank chatter stateside. Wall Street is also keeping a close eye on the energy sector, which is staging a phenomenal rebound following speculation OPEC could be making moves to stabilize oil prices. Amid all of this action, a number of equities in the ever-volatile biotech sector are making notable moves -- with some rallying to territory not seen in quite some time -- including Amicus Therapeutics, Inc. (NASDAQ:FOLD), Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA), and Asterias Biotherapeutics Inc (NYSEMKT:AST).

FOLD made waves this morning when it was announced the company will purchase rare disease specialist Scioderm, Inc. for roughly $230 million in cash and stock. The news initially sent the shares 6.5% higher, although FOLD was last seen 3.1% lower at $14.41. Year-to-date, though, the shares still maintain an impressive gain of 73%.

In the options pits, short-term speculators have shown a distinct preference for calls over puts. In fact, Amicus Therapeutics, Inc.'s Schaeffer's put/call open interest ratio (SOIR) of 0.29 rests lower than 94% of all similar readings taken in the past year. Simply stated, speculative traders have rarely been as call-heavy toward FOLD as they are now.

After last Friday's rumors that Baxalta Inc (NYSE:BXLT) -- which recently shunned a buyout bid of its own -- is in talks to purchase ARIA, shares of the latter jumped to an annual high of $10.07 -- and into overbought territory. In fact, the stock's 14-day Relative Strength Index (RSI) settled the week at 73. This may be why ARIA is down 6.3% today at $9.27, paring its 2015 advance to 35%.

Option traders, meanwhile, have taken the glass-half-empty approach to Ariad Pharmaceuticals, Inc. in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ARIA's 50-day put/call volume ratio of 0.71 ranks in the 83rd annual percentile. Given the security's year-to-date gain, though, some of this activity may be of the protective kind.

Unlike FOLD and ARIA, AST is soaring in afternoon action -- up 13.5% at $4.70. Sparking the day's risk-on attitude is data that showed promising results for its stem cell therapy -- specifically, on patients paralyzed by injuries to their spinal cord. Despite today's gap higher, the security stalled out near $5.50 -- a level that contained AST's advances in mid-July.

Short sellers are likely paying close attention to Asterias Biotherapeutics Inc's bull gap, considering 17% of the stock's float is sold short -- representing more than two weeks' worth of pent-up buying demand, at normal daily volumes. Should AST rally through previous resistance near $5.50, a capitulation from some of the weaker bearish hands could help propel the shares higher.