3 Sinking Stocks Seeing Heavy Options Trading

UBER and MYGN are extending their daily losing streaks

Aug 14, 2019 at 2:44 PM
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Panic selling has gripped Wall Street today following a rare yield-curve inversion. Among individual stocks making notable moves are ride-sharing name Uber Technologies Inc (NYSE:UBER), generic drugmaker Teva Pharmaceutical Industries Ltd (NYSE:TEVA), and molecular diagnostic specialist Myriad Genetics, Inc. (NASDAQ:MYGN). Here's a quick look at what's moving the shares of MYGN, TEVA, and UBER.

Uber Technologies Stock Trades at Record Low

Uber Technologies stock is down 7.6% at $33.66, extending a sell-off initially sparked by the company's second-quarter revenue miss last Friday. In fact, the shares are headed toward a fourth straight loss, and earlier tagged a record low of $33.37.

UBER options traders are calling a bottom for the stock, though. Amid accelerated activity -- the 42,000 calls traded is more than two times what's typically seen at this point -- the August 34 call is most active. It looks like new positions are being purchased here for a volume-weighted average price (VWAP) of $0.74, which would make breakeven for the call buyers at the close this Friday, Aug. 16, $34.74 (strike plus premium paid).

D.C. Drama Drops Teva Pharmaceutical Stock

Teva Pharmaceutical shares have slumped 9.8% to trade at $6.37, earlier matching their 19-year low of $6.34 from Aug. 7. The stock is reacting to news the U.S. House Oversight Committee and Senate Banking Committee have requested documents from the company, along with Mylan (MYL) and privately held Heritage Pharmaceuticals, related to generic drug pricing.

In a letter to the firms, Senators Elijah Cummings, D-Maryland, and Bernie Sanders, I-Vermont, said the "apparent obstruction" of the investigation "may have caused further harm to patients and health care providers by delaying the discovery of evidence about the companies' price-fixing." MYL stock, meanwhile, is down 7.8%.

This negative price action is more of the same for TEVA, which has shed more than 71% year-over-year. One options trader today is betting on even bigger losses in the near term. Roughly an hour ago, 18,000 September 5 puts were likely bought to open for $0.21 each, creating an initial cash outlay of $378,000 (number of contracts * premium paid * 100 shares per contract). This is the most the put buyer stands to lose if TEVA settles above $5 at expiration, while profit will accumulate on a move below breakeven at $4.79 (strike less premium paid).

Myriad Genetics Stock Sinks After Earnings

Myriad Genetics stock is spiraling, down 41% at $26.30, after the company reported weaker-than-anticipated fiscal fourth-quarter earnings and revenue, and gave fiscal 2020 guidance that arrived below expectations. SVB Leerink also pointed to increased scrutiny from the Food and Drug Administration (FDA) of the firm's GeneSight test, and  Jefferies said MYGN "remains a show-me stock" until these regulatory issues improve.

It's been a volatile stretch for MYGN stock, per its 30-day historical volatility of 157.7%, which registers in the 98th annual percentile. More specifically, the equity surged more than 54% on Aug. 1 -- hitting a nine-month high of $48.40 in the process -- but has since erased these gains, and is pacing toward a fourth consecutive daily loss.

MYGN options traders are positioning for more downside through week's end. Options volume is running at nine times the expected intraday pace, and the August 26 put is most active. Buy-to-open activity has been detected here, meaning speculators think MYGN will breach the $26 level by this Friday's close.


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