ACADIA Pharmaceuticals Inc. (ACAD) Bears Frown at FDA-Induced Lift

A big-time drug development has ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) sitting higher

by Josh Selway

Published on Nov 2, 2015 at 2:39 PM

Back in mid-July, drugmaker ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) jumped to an all-time high of $51.99. Since then, though, the shares have cooled, and have underperformed the S&P 500 Index (SPX) by 18.5 percentage points in the past two months. The stock is starting to rebound today, gaining 14.8% to trade at $39.97, after the Food and Drug Administration (FDA) granted the company's nuplazid treatment for Parkinson's disease priority review status. 

Looking elsewhere, put volume on ACAD is running at 17 times the average afternoon pace. The stock's most popular strike is the November 38 put, though it looks to be seeing sell-to-open activity. In other words, traders are betting on the shares to continue trading above $38 through the close on Friday, Nov. 20, when front-month options expire. 

Taking a step back, it's common to see traders buying to open ACAD puts. According to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day put/call volume ratio stands at 1.03, higher than 99% of all readings taken in the previous year. In other words, traders have been buying to open puts over calls at a faster-than-usual pace of late -- suggesting they may not be too pleased with today's bullish price movement.

ACAD also boasts high short interest levels. Over 18% of the equity's float is sold short, and would take over 12 days to repurchase, at normal daily volumes. 

Analysts, meanwhile, have taken a strong bullish tone on the stock. Seven of eight covering brokerage firms say ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is a "buy" or better, with not a single "sell" to be found. Looking ahead, the company is slated to reported earnings this Thursday evening.

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