3 Drug Stocks Seeing Unusual Options Trading Today

Arrowhead and Array stocks are trading at fresh highs

Managing Editor
May 21, 2019 at 3:24 PM
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U.S. markets are moving higher today, tech recovering from yesterday's sell-off. Three pharmaceutical names also making notable moves this afternoon are Array Biopharma Inc (NASDAQ:ARRY)Sesen Bio Inc (NASDAQ:SESN), and Arrowhead Pharmaceuticals Inc (NASDAQ:ARWR). Below, we will dive into what is moving the shares of ARRY, SESN, and ARWR.

Array Biopharma Hits Record High on Trial Success

Cancer drug manufacturer Array is up 20.6% at $25.28, earlier hitting a record high of $25.86, after saying its triple combo therapy drug met its main goals in its late-stage trial. ARRY has had an outstanding year on the charts, up 79% year-to-date, while today's impressive gain looks to be stemming from a bounce off the supportive 100-day moving average.

Array options traders have been busy today, with 19,000 calls and 6,900 puts across the tape so far, volume pacing at more than eight times the expected rate. The June 21 call is seeing the most attention, where 7,120 contracts have been traded.

Currently, all nine brokerage firms carry a "strong buy" recommendation on the stock, with not a single "sell" in sight. This optimistic outlook is also seen in ARRY's average 12-month price target of $30.40, which stands at an 18% upside to current levels.

SESN Puts Pop on FDA Note

Also making impressive moves this afternoon is SESN, at the top of Nasdaq, after the Food & Drug Administration (FDA) approved the company's analytical comparability plan to move manufacturing for its bladder cancer drug, Vicinium. Sesen stock is now trading up 10.3% at $1.85, pacing toward its sixth straight daily gain, and its first close above $1.80 since November.

SESN is seeing unusual put options activity this afternoon, running at 39 times the average volume. Specifically, 398 puts have been traded, with the August 2.50 put carrying the most attention, where contracts 217 have traded. In other terms, this suggests put traders expect the pharma name to fall further below $2.50 by expiration on Friday, August 16 -- still record-high territory for the shares.

Arrowhead Pharmaceuticals Surges on SPCY Addition

Meanwhile, Arrowhead Pharmaceuticals has gapped 10.8% higher to trade at $20.99, on news the company will be added to the S&P SmallCap 600 Index (SPCY). ARWR is also off a fresh five-year peak of $22.74, bringing its year-over-year gain to an outstanding 114%.

Options volume has also surged on ARWR, with 4,300 calls and 1,200 puts across the tape -- eight times the average volume. Most popular has been the December 25 and June 23 calls, where over 900 contracts traded. What's more, Arrowhead's 30-day at-the-money (ATM) implied volatility (IV) of 53.4% ranks in the 1st annual percentile, meaning short-term options premiums are pricing in relatively low expectations at the moment.


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