The Penny Stock Popping on an FDA Nod; Chipotle Seeks New CEO

Near-term options on SORL are attractively priced right now

Managing Editor
Nov 29, 2017 at 10:08 AM
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U.S. stocks are trading higher this morning, on hopes for tax reform, and as traders eye Fed Chair Janet Yellen's testimony. Three stocks making notable moves today are fast-casual restaurant chain Chipotle Mexican Grill, Inc. (NYSE:CMG), drug concern Capricor Therapeutics Inc (NASDAQ:CAPR), and Chinese automotive parts manufacturer Sorl Auto Parts, Inc. (NASDAQ:SORL). Here's a closer look at what's moving shares of CMG, CAPR, and SORL.

CMG Reveals Search for New CEO

Shares of Chipotle Mexican Grill stock were briefly halted in pre-market trading, as the company announced that co-founder and current CEO Steve Ells will be stepping down to the position of executive chairman. At last check, CMG stock was up 5% at $300.01, but still remains well shy of filling its late-October, post-earnings bear gap.

Ahead of Chipotle stock's big news, options traders were scooping up calls at a rapid-fire rate. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows CMG with a 10-day call/put volume ratio of 1.43, which ranks in the 94th percentile of its annual  range. This suggests calls were bought to open over puts at a faster-than-usual clip during the past two weeks.

Echoing this, CMG has a Schaeffer's put/call open interest ratio (SOIR) of 0.63, the lowest of its annual range, meaning options traders targeting contracts expiring within three months haven't been more call-skewed in the past year.

CAPR Receives FDA Nod to Test DMD Drug in Humans

Pharma stock CAPR is soaring after receiving a nod of approval from the Food & Drug Administration (FDA) to begin testing its Duchenne muscular dystrophy (DMD) drug in humans. CAPR was last seen up 19.3% at $2.29, and the penny stock has skyrocketed 181% in the past six months, with its 200-day moving average emerging as support. Capricor Therapeutics stock most recently peaked at a fresh annual high Oct. 2.

Short interest on CAPR rose 17% during the past two reporting periods, and now represents almost 18% of the stock's total available float. However, at Capricor stock's daily average trading volume, it would take less than two days for the shorts to cover their bearish bets.

SORL Scores Shanghai Contract Win

SORL stock is moving higher after the company won contracts from the Shanghai Municipal Transportation Commission to provide electric air compressors to Shanghai's first-ever Bus Rapid Transit (BRT) system in China's largest city. SORL was last seen up 1.9% at $7.10, and has more than doubled year-to-date.

SORL has a Schaeffer's Volatility Index (SVI) of 87%, which ranks just 15 percentage points from a 12-month low. In other words, volatility expectations for short-term options are unusually muted right now -- a boon for would-be premium buyers.


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