Mallinckrodt PLC (MNK) Earnings Beat Burns Bears

Mallinckrodt PLC (MNK) reported better-than-expected quarterly earnings, sending the stock higher andburning bears in and outside of the options pits

by Kirra Fedyszyn

Published on May 3, 2016 at 1:03 PM

Drugmaker Mallinckrodt PLC (NYSE:MNK) is up 7.4% at $63.47 today -- and is currently one of the top performers on the S&P 500 Index (SPX) -- after the company reported a fiscal second-quarter earnings beat and raised its full-year outlook. But not everyone is happy with the equity's big gains, as bearish sentiment both in and out of the options pits has been running at extreme levels of late.

Specifically, although
short interest has been on the decline since hitting an annual peak in mid-March -- down 8.6% -- it still accounts for more than 11% of MNK's available float. At the stock's average daily volume, it would take more than a week to cover all these pessimistic positions.

In the options pits, meanwhile, MNK currently sports a 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 23.50 -- an annual high. Echoing this put-skewed extreme is the equity's Schaeffer's put/call open interest ratio (SOIR) of 3.43 -- also in the top percentile of its 12-month range. That means the preference for puts among options expiring within three months has never been higher in the last year.

While today's rally has pared MNK's 2016 losses to 15%, there appears to be a glimmer of hope for bearish bettors. Specifically, the shares are once again facing off with resistance in the $65-$70 region, which has been trouble for Mallinckrodt PLC (NYSE:MNK) since last fall.

MNK Daily Chart May 3


Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.


A Schaeffer's exclusive

6 Sectors for Summer

Access your FREE insider report before it's too late!


  
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


The Next Big Player in U.S. MJ Boom
Most pure-play marijuana stocks in the U.S. trade on the Over-the-Counter stock exchange.
Planet Fitness Stock Lifted Amid Re-Opening Optimism
Planet Fitness reopened around 800 facilities in North America
Coffee Stock Drops Despite Cost-Cutting Initiatives
Starbucks asked employees to further limit working hours or take unpaid leave
The Big Bankruptcy You Should Be Afraid Of
Porter Stansberry is making a concerning prediction.