GlaxoSmithKline Stock Higher on Novartis Deal

Options sentiment has been quite bearish lately

Managing Editor
Mar 27, 2018 at 9:33 AM
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Shares of pharmaceutical concern GlaxoSmithKline Plc (NYSE:GSK) are moving higher after early this morning it was announced it's buying Novartis AG's (NVS) stake in their joint venture for $13 billion. In response, GSK is trading up 4% at $38.92.

Today's positive price action is a rare sight for GSK, as the stock has shed almost 12% year-over-year, with the 200-day moving average serving as a stiff ceiling since July. On the other hand, the security has found support near the $35 level, the site of its year-to-date breakeven point.

In the options pits, sentiment has been bearish of late, with data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) showing GSK with a 10-day put/call volume ratio of 3.42, ranking in the 93rd percentile of its annual range. This shows that during the past two weeks, puts have been purchased over calls at a faster-than-usual clip.

What's more, GSK stock's Schaeffer's put/call open interest ratio (SOIR) of 1.75 ranks in the 98th percentile of its annual range, showing a heavier-than-normal put-skew among options expiring within three months. Popular near-term options have been the April 35 and 36 puts, as well as the weekly 4/27 36-strike put.

 

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