Oramed Pharmaceuticals, Inc. (ORMP) Option Buyers, Analysts Anxious for Data

Oramed Pharmaceuticals, Inc. (NASDAQ:ORMP) call open interest is at an annual high ahead of highly anticipated drug data

May 16, 2016 at 2:50 PM
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The shares of drugmaker Oramed Pharmaceuticals, Inc. (NASDAQ:ORMP) are at it again, thanks to escalating optimism ahead of key drug data. On Friday, ORMP surged after Rodman & Renshaw said the data could be "transformative" for ORMP; today, the stock is another 25.6% higher at $9.42, after Aegis Capital analysts said they're "on the edge of our seats" ahead of the mid-stage trial results for ORMD-0801. Oramed's drug data is expected to be released sometime this week -- and upbeat news could spark cheers in the options pits.

The stock's 50-day call/put volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 10.33. In other words, speculators have bought to open more than 10 calls for every put during the past 10 weeks.

Echoing that, ORMP option open interest is currently at an annual high, though calls outnumber puts by a margin of nearly 8-to-1. Peak open interest among any series can be found at the May 10 strike, with more than 5,900 calls outstanding. The next most-populated strike is the May 5 put, with fewer than 400 contracts open. ORMP hasn't closed a session north of $10 since August 2014.

In fact, the round-number $10 region has stifled ORMP's rally attempts on several occasions since early 2014. The abundance of overhead calls could translate into an options-related speed bump this week, as front-month options expiration approaches.

ORMP weekly chart May 16

Meanwhile, it's worth noting that short interest on Oramed Pharmaceuticals, Inc. (NASDAQ:ORMP) represents 5.3% of the stock's total available float, which would take more than two weeks to repurchase, at the equity's average pace of trading. Perhaps some of those out-of-the-money May 10 calls were purchased as hedges by the shorts.

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