Amarin Calls Pop After Big FDA Ruling

The FDA approved AMRN's Vascepa for broader use

Managing Editor
Dec 16, 2019 at 10:12 AM
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The shares of Amarin Corporation (NASDAQ:AMRN) are up 1.9% to trade at $24.57, after the Food and Drug Administration (FDA) approved Vascepa -- the drugmaker's fish-oil derived treatment for heart disease -- for broader use. In response, Oppenheimer upped its price target to $8 from $7, while Citigroup said it expects the label expansion to help acquirers get more comfortable with the drug.

Out of the gate, Amarin stock hit $26.12, a new 12-year high, and is now up 78% year-to-date.  For the past 12 months, the $24 level served as a ceiling on three separate occasions. But since mid-October, the ascending 20-day moving average has guided the security higher. 

Options traders are responding in kind today. At last check, 23,000 calls have already changed hands, four times the average intraday amount, and 10 times the number of puts traded. Leading the charge is the December 26 call, where new positions are being opened. This indicates some call traders are banking on AMRN to keep climbing through the week, when the options expire.

Today's options trend runs in line with the recent trend. In the last 10 days, 33,337 calls have been bought at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to just 6,588 puts. Echoing this is the security's Schaeffer's put/call open interest ratio (SOIR) of 0.29, which ranks in the 13th annual percentile -- underscoring a very unusual call-skew among short-term speculators.

 

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