Why Best Buy and Acorda Are Selling Off Today

Gold stocks are rallying as tensions with North Korea resurface

Aug 29, 2017 at 10:36 AM
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U.S. stocks are trading lower this morning after North Korea launched a missile over Japan, leading President Trump to announce that "all options are on the table" now. Among specific equities in focus are electronics retailer Best Buy Co Inc (NYSE:BBY), pharma company Acorda Therapeutics Inc (NASDAQ:ACOR), and gold producer Yamana Gold Inc. (NYSE:AUY). Here's a quick look at what's moving shares of BBY, ACOR, and AUY.

Best Buy Down Despite Earnings Beat

Best Buy reported better-than-expected second-quarter earnings before today's open, but has erased its pre-market gains to trade down 10.3% at $56.03. Traders are likely keying on remarks from CEO Hubert Joly, who said the robust 5.4% rise in same-store sales during the recently concluded quarter is not expected to continue, and added that it's "nearly impossible" right now to predict the impact of Hurricane Harvey on its full-year forecast.

Despite today's sell-off, BBY still sports an impressive gain of 44% year-over-year, and touched a record high of $63.32 on Aug. 24. Nevertheless, options players were bracing for a downside move post-earnings; BBY's Schaeffer's put/call open interest ratio (SOIR) of 2.43 ranks in the 80th annual percentile, as near-term options traders have rarely been more put-heavy in the last 12 months.

ACOR Sells Off on FDA Rejection

Acorda Therapeutics is making headlines after the FDA rejected its marketing application for Inbrija, ACOR's Parkinson's drug, as not "sufficiently complete." The disapproval has sent ACOR stock down 27% to $18.77, effectively erasing about two months' worth of hard-won gains for the drug stock.

Short interest on Acorda dropped more than 7% over the past two reporting periods, but still accounts for 20% of the stock's float. Short selling is temporarily restricted on ACOR due to today's price plunge, but the FDA setback could embolden more bears to place new bets against the stock in the short term.

AUY Options Traders Lean Towards the Bearish Camp

North Korea tensions have driven gold stocks through the roof this morning, as demand for safe-haven assets increases rapidly. AUY is up 0.9% to trade at $2.91, having backed down from an early surge above the $3 level -- which hasn't been conquered on a daily closing basis since April 21.

Despite AUY's low share price, options players remain skewed toward downside bets. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AUY's 10-day put/call open interest ratio ranks in the 69th percentile of all other ratings from the past year, indicating a healthier-than-usual appetite for bearish bets over bullish of late.

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