Options Traders Win with SAGE, CLVS Stock Surges

It's been a busy day in the healthcare sector

Jan 7, 2019 at 2:15 PM
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The healthcare sector is in focus today, most notably due to Eli Lilly's (LLY) plans to buy Loxo Oncology (LOXO) for $8 billion and the J.P. Morgan Healthcare Conference. A couple other names also making big moves are Clovis Oncology Inc (NASDAQ:CLVS) and SAGE Therapeutics Inc (NASDAQ:SAGE), with shares of both CLVS and SAGE surging on upbeat drug buzz. What's more, these gains could be good news for recent options traders.

This morning Clovis Oncology revealed how much money it made from its drugs in 2018 and Wall Street is cheering the numbers. The main highlight was the company's cancer drug Rubraca is expected to bring in between $95.3 and $95.8 million for the year. Fanning the bullish flames was a note out of Leerink that called out CLVS as a potential winner from the Eli Lilly-Loxo Oncology deal.

CLVS stock was last seen trading up 18.7% at $21.76, but the 80-day moving average could be putting a lid on the rally. Even with these gains, the shares' remain in a sharp downtrend for the past 52 weeks, losing almost 68% during the time. Analysts have remained bullish on the security, with seven of nine in coverage recommending to buy it.

Meanwhile, options traders may be profiting from today's price action. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day call/put volume ratio of 19.54 that ranks in the 85th annual percentile, meaning there was unusual demand for long call options.

SAGE stock is also exploding higher today, trading up 41% at $137.46, briefly topping its 200-day moving average for the first time since early September. This comes after the company said its postpartum depression treatment met its main goals in a late-stage trial.

Bullish bettors at the ISE, CBOE, and PHLX had also been targeting SAGE Therapeutics. The 10-day call/put volume ratio across these exchanges comes in at 4.46 for the security, good enough for the 73rd annual percentile.


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