AstraZeneca plc (AZN) Pops on Upbeat Drug Data

Drugmaker AstraZeneca plc (ADR) (NYSE:AZN) is staring down a key trendline on a drug-data-induced rally

by Kirra Fedyszyn

Published on Jul 18, 2016 at 11:12 AM

Biotech stock AstraZeneca plc (ADR) (NYSE:AZN) is trading 1.1% higher at $30.59 today, following news that the company's lung cancer treatment, Tagrisso, met its primary endpoint in a Phase 3 trial. The stock has been surrounded by optimism in the options pits, despite giving up 10% year-to date. But these bulls may be on edge, as the shares are running headlong into their overhead 200-day moving average -- a trendline the stock hasn't topped since early January. Still, it looks like AZN may have found a foothold at the round $30 mark, a level that's home to peak call and put open interest in the August series.

As alluded to, options traders have been betting on a bounce, although absolute volume in the equity's options pits has been relatively light. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), more than 34 AZN calls have been bought to open for each put over the past two weeks. What's more, the resulting 10-day call/put volume ratio of 34.16 is seated at a 12-month high.

Analysts have taken a much more cautious view of the stock. Of the four brokerage firms providing coverage, only one recommends buying AZN. Many traders are skeptical, as well. While short interest accounts for just 1% of AZN's available float, these bearish bets have been steadily rising for roughly a year, including a nearly 14% pop during the two most recent reporting periods. Moreover, the 25.3 million shorted shares represent the stock's highest level of short interest since 2002. Should these short sellers begin to back off, or analysts raise their outlooks, a breakout above the 200-day moving average could help AstraZeneca plc (ADR) (NYSE:AZN) extend today's gains.

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