Ariad Pharmaceuticals, Inc. (ARIA) Bears Get Burned on Layoff News

Ariad Pharmaceuticals, Inc. (ARIA) is one of several drug stocks in the news today, as the firm announced a workforce reduction

by Alex Eppstein

Published on Mar 29, 2016 at 2:10 PM
Updated on Jun 24, 2020 at 10:16 AM

Drug stocks are making waves today, and Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) is no exception. The shares are up 1.7% at $6.12, after the firm announced a workforce reduction as part of its ongoing strategic review. While shareholders may welcome the bullish price action, a number of options traders and short sellers may be kicking rocks.

At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ARIA has racked up a put/call volume ratio of 0.84 over the past 10 days. Though the ratio is call-skewed on an absolute basis, it ranks in the high 89th annual percentile -- meaning traders have been buying to open puts over calls at a faster-than-usual pace.

Short sellers have been piling on ARIA, as well. Currently, 38.5 million shares are sold short -- the highest level since early October. At the stock's average trading levels, it would take 7.5 sessions for short sellers to cover these bets.

Technically speaking, Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) has spent most of March trading sideways between $6 and $6.75. While today's pop has the stock back above its previously supportive 120-day moving average, its 200-day trendline looms as potential resistance after stymieing last week's breakout attempt.

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