M&A Hopes Trigger a Biogen Inc (BIIB) Bounce

Biogen Inc (BIIB) hit a two-year low out of the gate, but is gaining on comments from one Baird analyst

Jun 22, 2016 at 11:11 AM
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Biogen Inc (NASDAQ:BIIB) touched a two-year low of $232.16 earlier, but was last seen 2.3% higher at $238.28. The stock's intraday rebound may be connected to a brokerage note from Baird, which presents the biotech company as a possible M&A play. "With the stock now trading at lows it hasn't seen since six months post Tecfidera launch in 2013, it's starting to look like a reasonable acquisition target," wrote the analyst.

Meanwhile, options traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have been lining up to bet on losses for BIIB. The biotech stock's 10-day put/call volume ratio of 0.87 across those exchanges ranks in the top quartile of its 12-month range.

Likewise, BIIB's Schaeffer's put/call open interest ratio (SOIR) checks in at 1.10 -- in the 85th annual percentile. In other words, among short-term options, traders are more put-skewed than usual. Focusing more specifically on near-the-money strikes in the July series, the stock's front-month gamma-weighted SOIR registers at 2.40, with put open interest more than doubling call open interest.

Short sellers are finally starting to take notice of Biogen Inc (NASDAQ:BIIB), too. While short interest hit a three-year low recently, these bearish bets have exploded of late -- jumping over 25% during the last two reporting periods. Should short selling continue to accelerate, the biotech stock could explore even lower lows.

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