Penny Stock Picks Up FDA Nod

Options traders have been piling on calls of late

Digital Content Manager
Jun 21, 2019 at 9:53 AM
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The shares of Ocular Therapeutix Inc (NASDAQ:OCUL) are making a comeback today, after the drugmaker announced that the Food and Drug Administration (FDA) approved the company's DEXTENZA to treat patients with ocular inflammation following eye surgery. The drug already had approval to treat post-surgery pain in patients. The stock is trading up 2.2% at $4.22 in response. 

This follows yesterday's 7.6% drop, the biggest the equity has seen since its massive sell-off that resulted in an all-time low of $2.35 in mid-May. The equity has rallied hard off this bottom, but ran into pressure at its 200-day moving average. Despite its recent pullback, OCUL has still managed to keep its head above the year-to-date breakeven level.

Analysts have been mostly optimistic, with four "buy" or better ratings on the table, and only one "hold." Plus, the consensus 12-month target price of $9.67 is more than double last night's close. 

Short interest, on the other hand, has risen to an all-time high. During the last two reporting periods these bears tacked on 9.8% to the number of shares sold short. The 9.22 million shares sold short represent an eyebrow-raising 31.7% of the stock's available float, and would take nearly three weeks to buy back, at OCUL's average pace of trading. 

On the other hand, a number of bulls have come on to the options pits. In the past 10 days, 135 calls have been bought for every put on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits in the 90th percentile of its annual range, suggesting a much healthier appetite for calls over puts of late. Looking back at the last two weeks, it appears that a large chunk of this activity occurred at the December 5 call.

 

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