FDA Nod Lifts BioDelivery Sciences International, Inc. (BDSI), Puts Bears on Notice

A rare rally for BioDelivery Sciences International, Inc. (BDSI) may have option bears and short sellers on edge

by Alex Eppstein

Published on Oct 26, 2015 at 12:01 PM
Updated on Jun 24, 2020 at 10:16 AM

BioDelivery Sciences International, Inc. (NASDAQ:BDSI) gapped up at the open, and at least check, was 13.5% higher at $5.99. The shares are being propelled by the Food and Drug Administration's (FDA) approval of the company's opioid-based pain treatment, Belbuca -- to which Endo International plc (NASDAQ:ENDP) has licensed global manufacturing and marketing rights. Amid these developments, BDSI options are flying off the shelves -- especially on the put side of the aisle, where the contracts are trading at 12 times the intraday norm.

Taking a step back, today's put-bias is business as usual. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), BDSI has racked up a 50-day put/call volume ratio of 0.59 -- which rests just 16 percentage points from a 52-week peak. In other words, traders have been buying to open puts over calls at a faster-than-usual clip in recent months.

Short sellers are similarly bearish. During the last two reporting periods, short interest on BDSI jumped 13%, and now makes up 29% of its total float -- the highest level in over a decade. At typical daily trading levels, it would take nearly seven sessions to repurchase these positions.

While these skeptics may be feeling the pain today, the fact is BioDelivery Sciences International, Inc. (NASDAQ:BDSI) has earned the negative attention. Year-to-date, the pharmaceutical stock has surrendered roughly half of its value, and hit a nearly two-year low of $4.66 late last month.

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