Alzheimer's Breakthrough Has Anavex Life Sciences Corp. (AVXL) Roaring

Anavex Life Sciences Corp. (AVXL) is rewarding bullish options traders today

by Alex Eppstein

Published on Apr 25, 2016 at 10:44 AM
Updated on Jun 24, 2020 at 10:16 AM

Biotech stock Anavex Life Sciences Corp. (NASDAQ:AVXL) is breaking out this morning, after the drugmaker's Alzheimer's treatment reportedly allowed an Australian woman to regain the ability to play the piano. At last check, AVXL has surged 17.2% at $6.14, which should lift the spirits of bullish options traders.

At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 4.3 AVXL calls for every put during the last 10 weeks. Underscoring this call-skew, AVXL's Schaeffer's put/call open interest ratio (SOIR) checks in at 0.27. In other words, calls nearly quadruple puts among options set to expire in the next three months.

Meanwhile, short sellers have been turning tail. During the latest reporting period, short interest on AVXL plunged almost 15%. However, 8.6% of the stock's float remains dedicated to short interest, and it would take over seven sessions to cover, at its typical trading levels. Taking this into consideration, it's possible short sellers have been buying calls to hedge against unexpected breakouts -- like the one we're seeing today.

On the charts, today's bull gap has Anavex Life Sciences Corp. (NASDAQ:AVXL) on track for its highest daily finish since Jan. 4. Also, the biotech stock is now back in the black on a year-to-date basis, up 10.2%.

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