Biotech Stock Bursting After Congressional Spending Bill

OMER stock is pacing for its best day since 2015

Mar 22, 2018 at 10:02 AM
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The shares of eye drug maker Omeros Corporation (NASDAQ:OMER) are skyrocketing this morning, thanks to the latest spending bill from Congress. Specific language in the package's Medicare reimbursement policy is beneficial to Omeros and "almost no other drug companies," according to STAT News (subscription required). Against this backdrop, OMER stock has soared 45% to trade at $16.89, on pace for its best day since August 2015.

Omeros shares are now knocking on the door of their 200-day moving average, which hasn't been conquered on a daily closing basis since mid-January. Prior to today, the stock was down 40% so far in 2018 -- and just touched an annual low of $8.36 on March 2 -- but has trimmed that deficit to 15%.

A short squeeze could add fuel to Omidria maker's fire, to boot. More than 18% of OMER stock's total float is dedicated to short interest, representing a week's worth of pent-up buying demand, at the security's average pace of trading. That's plenty of fuel for a short-covering rally.

Even before today's pop, though, OMER options traders were optimistic. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators bought to open more than four Omeros calls for every put during the past two weeks. However, some of that call buying -- particularly at out-of-the-money strikes -- could be attributable to short sellers seeking an options hedge.

 

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