Valeant Stock Pops On Drug Approval, Insider Buying

VRX stock is trading back atop the 200-day moving average

Mar 14, 2018 at 9:58 AM
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Valeant Pharmaceuticals Intl Inc (NYSE:VRX) stock is trading up 5.4% at $16.95, as the shares try to recover from last month's earnings bear gap. Boosting VRX stock this morning is news the company's plaque psoriasis treatment, Siliq, has been approved in Canada. Valeant expects to begin marketing efforts in the country later this year.

Also helping Valeant stock today are Securities and Exchange Commission (SEC) filings showing the drugmaker's CEO and CFO just bought 30,000 and 15,000 shares, respectively, when VRX was trading near $16. As such, the equity is on pace for a second straight close atop its 200-day moving average, after starting the month south of this trendline. 

Call buying has continued to outpace put buying during the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), with the April 17 call seeing the largest increase in open interest during this time. Data confirms traders have mostly been buying to open the option.

However, VRX's 10-day put/call volume ratio of 0.71 across these exchanges ranks just 4 percentage points from an annual high. In other words, while long calls have remained more popular on an absolute basis, long puts have actually seen stronger-than-usual interest, on a relative basis. The June 15 put is one contract that saw heavy attention during the past 10 days, while more than 6,000 positions were added at the August 13 put, too.

Regardless of sentiment, Valeant Pharmaceuticals has been a profitable target for premium buyers. This is according to its Schaeffer's Volatility Scorecard (SVS) of 100, showing a strong tendency to make bigger-than-expected moves on the charts, compared to what the options market was anticipating.


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