Valeant Pharmaceuticals Intl Inc (VRX) Pops on CEO Stock Purchase

Valeant Pharmaceuticals Intl Inc (VRX) stock is trading higher on news that CEO Joseph Papa purchased 202,000 shares

by Kirra Fedyszyn

Published on Jun 13, 2016 at 9:47 AM
Updated on Jun 13, 2016 at 9:49 AM

Drugmaker Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is 1.5% higher at $24.51 this morning, after CEO Joseph Papa purchased 202,000 shares at an average price of $24.48, according to a recent Securities and Exchange Commission (SEC) filing. Still, the battered stock is off 89% year-over-year, and has been pressured lower by its 40-day moving average since January. In fact, a recent rejection at this trendline sent VRX spiraling to a new five-year low.

Today's upward price action should make recent options bulls happy. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), VRX's 50-day call/put volume ratio of 1.92 shows long calls nearly doubling puts. Moreover, this ratio ranks higher than 96% of all readings taken in the past year.

Likewise, VRX has a Schaeffer's put/call open interest ratio (SOIR) of 0.88 -- just 3 percentage points from an annual low. That means that, among options expiring in three months or less, traders have rarely been more call-skewed.

Outside of the options pits, however, plenty of bearish sentiment remains. Short interest on VRX rose by more than 44% during the most recent two-week reporting period, representing 7.6% of the equity's available float. And of the 16 analysts following VRX, 11 still rate it a "hold" or "strong sell." Should short sellers begin to cover their positions, or brokerages raise their outlooks, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) could get an even bigger leg up. Looking ahead, the company will put on its annual shareholders meeting tomorrow morning. 

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