Options Traders Blast Tripling Drug Stock

DLTR and PANW are both lower after issuing weak guidances

by Patrick Martin

Published on Nov 26, 2019 at 2:41 PM

Stocks are hitting new highs once more, this time thanks to a busy day of retail earnings and economic data. Among the names making notable moves today are drugmaker ChemoCentryx Inc (NASDAQ:CCXI), discount retailer Dollar Tree, Inc. (NASDAQ:DLTR), and cybersecurity name Palo Alto Networks Inc (NYSE:PANW). Here's a quick look at what's moving the shares of CCXI, DLTR, and PANW.   

ChemoCentryx Triples After "Transformational" Data

The best stock on Wall Street today by a wide margin is ChemoCentryx, last seen up 273.4% to trade at $30.10. This comes after the company's blood disorder drug met the main goals in a late-stage study. H.C. Wainwright responded with a price-target hike to $40 from $23, and J.P. Morgan Securities called the breakthrough "transformational." CCXI earlier traded at a record high of $36.88, and has now nearly quintupled off its Aug. 6 low of $6.16.

The drug stock has seen a flurry of options trading in response. At last check, nearly 8,000 puts have changed hands, 11 times the average intraday amount and volume already at a new annual high. While the December 10 and 15 strike calls are the most popular, there are also new positions being opened at the December 30 put.

Dismal Guidance Burning Down Dollar Tree

One retail loser on the earnings front today is Dollar Tree, after the company reported third-quarter earnings that fell short of expectations. In addition, Dollar Tree trimmed its holiday-quarter forecast, citing the August round of tariffs as a catalyst for the lower-than-expected figures. As a result, DLTR -- last seen down 17.3% to trade at $93 -- is heading toward its worst single-session drop in at least 10 years. It's one of the worst on the New York Stock Exchange (NYSE) today, now barely clinging to its year-to-date breakeven level.

With the stock on the short-sale restricted list today (SSR), options trading has exploded. With under two hours left in today's trading, almost 66,000 contracts have changed hands, 23 times the expected intraday amount and and volume pacing for the 100th percentile of its annual range. Leading the charge is the January 2020 110-strike call, where new positions are being opened.

PANW Weekly Calls Pop Despite Weak Outlook

Palo Alto Networks stock is down 12.3% to trade at $219.56, although the company's fiscal first-quarter earnings beat expectations. However, the software name's second-quarter profit forecast came in below estimates thanks to higher costs and rising competition. Three analysts have issued price-target cuts -- including to $255 from $270 at Piper Jaffray -- while Citigroup and Oppenheimer hiked their targets to $283 and $275, respectively. PANW is set for its worst day since March 2017, but the drop has fallen just short of the stock's 160-day moving average.

As it has lately, PANW options have soared in popularity today. At last check, more than 61,000 PANW options have been traded, 11 times the expected intraday amount and almost nine times the average daily volume. The weekly 11/29 225-strike call leads the way, and there are also new positions being opened at the weekly 11/29 230-strike call.


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