Intra-Cellular Stock Doubles After Big FDA Win

The FDA approved the company's schizophrenia treatment

by Patrick Martin

Published on Dec 23, 2019 at 10:17 AM

One of the best stocks on the Nasdaq this morning is Intra-Cellular Therapies Inc (NASDAQ:ITCI), up 126.6% to trade at $28.19. This comes after the Food and Drug Administration (FDA) approved Caplyta, the healthcare company's treatment for schizophrenia. Intra-Cellular plans to launch the drug in the first quarter of 2020.

ITCI earlier traded at $28.60, its highest level since September 2016. This is pacing to be the stock's best day since December 2013. And since bottoming at $6.75 on Oct. 1, the shares have now nearly tripled. Prior to today's breakout, the equity was up a modest 15% in 2019.

A short squeeze could power additional gains. Short interest increased by 15.8% in the two most recent reporting periods to 10.80 million shares, a new record high. This accounts for 23.2% of ITCI's total available float, and 11.3 times the average daily trading volume. 

Options traders have targeted puts with particular gusto lately. The security's 10-day put/call volume ratio of 1.92 shows that puts are outnumbering calls on an absolute basis at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). What's more, this ratio sits higher than 96% of all other readings from the past year, indicating a healthier-than-usual appetite for these bearish bets over bullish of late. 

Today, though, is a different story. Already, more than 3,000 calls have changed hands, five times the average intraday amount and volume pacing for the 100th percentile of its annual range. There are new positions being opened at the January 2020 21-strike call, which indicates options traders are banking on this breakout to last. 

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