Red-Hot Penny Stock Triples on Subsidiary News

Cantor Fitzgerald said ICPT stock is now "oversold"

Apr 11, 2019 at 2:37 PM
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The U.S. stock market has swung lower this afternoon, after holding modest gains through midday. Among individual stocks making notable moves are steel producer United States Steel Corporation (NYSE:X), liver diseases specialist Intercept Pharmaceuticals Inc (NASDAQ:ICPT), and financial technology and fruit juice firm Future FinTech Group Inc. (NASDAQ:FTFT). Here's a quick roundup of what's moving the shares of X, ICPT, and FTFT.

BAML Smacks X Stock With Double Downgrade

U.S. Steel got hit with its second "underperform" rating this week, with BofA-Merrill Lynch the latest to downgrade the steel stock. The brokerage firm, which previously held a "buy" rating, also slashed its price objective for X to $18 from $31, citing depleting U.S. market conditions. In reaction, X stock is down 2.7% at $16.78, fresh off a two-year low of $16.57, and headed toward its sixth straight loss.

One speculator is positioning for even more downside. Amid accelerated trading today -- more than 92,500 options have changed hands, three times the expected intraday amount -- a 17,689-contract block of May 15 puts was likely bought to open for an initial cash outlay of $831,383 (number of contracts * $0.47 premium paid * 100 shares per contract). This is the most the put buyer stands to lose, should X remain above $15 through May options expiration, while profit will accumulate on a move below breakeven at $14.53 (strike less premium paid).

Intercept Pharmaceuticals Sells Off After NASH Drug Data

Intercept Pharmaceuticals stock is down 13.3% today at $104.68, after the company presented data from its Phase 3 obeticholic acid, or OCA, study in patients with liver fibrosis due to non-alcoholic steatohepatitis, or NASH. The stock's reaction to positive data for the NASH treatment points to "overblown" concerns from investors, according to Jefferies, while Cantor Fitzgerald said the equity is now "oversold based on today's events."

This drop has ICPT trading back near its 200-day moving average, which has helped usher the shares to a 49% year-over-year lead. This trendline is currently located around $106, and it looks as if a number of options traders today are betting on a big bounce from here.

With 7,800 options on the tape so far -- six times what's typically seen at this point -- the June 140 call is most active. It looks like new positions are being purchased here, as call buyers target a move back above $140 by summer. For reference, the last time Intercept Pharmaceuticals traded north of here was October 2016.

Future FinTech Stock Sails to Top of the Nasdaq

Future FinTech stock has nearly tripled today, last seen up 203.1% at $2.37, set for its highest close since April 13, 2018. The shares are rallying on news the Chinese company created a new subsidiary, Chain Cloud Mall Logistics Center, to expand logistics of its Chain Cloud Mall. Today's pop puts the penny stock at the top of the Nasdaq, and on track to close above its 320-day moving average for the first time since January 2018.

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