Puts Pop as EXAS Heads For Worst Day in 16 Months

Exact Sciences' preliminary revenue is dragging the stock lower

by Patrick Martin

Published on Jan 13, 2020 at 10:05 AM
Updated on Jun 24, 2020 at 10:16 AM

The shares of EXACT Sciences Corporation (NASDAQ:EXAS) are down 11.4% to trade at $92.52 this morning, after the molecular diagnostics specialist gave its preliminary fourth-quarter revenue results. The company expects to report revenue between $294 million and $296 million for the fourth quarter, and with the stock landing on the short-sale restricted list this morning, options traders are reacting to the news.

In just the first hour of trading, puts are crossing the tape at 13 times the average intraday pace, with volume pacing for the 100th percentile of its annual range. New positions are being opened at the January 2020 100 put, as well as the February 80 put. 

There's usually a greater appetite for calls. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), EXAS' 10-day call/put volume ratio is perched at 6.18 and ranks in the 94th percentile of its annual range. However, considering 10% of the equity's total available float is sold short, its possible some of these calls could be shorts hedging against any upside risk.

On the charts, EXAS looks like it will snap a five-day winning streak, and is on pace for its worst single-session drop since August 2018. On Thursday the shares toppled their 160-day moving average for the first time since late September. The security gave back this trendline already today, but remains up 21% year-over-year.

And if you're looking for additional explanation behind today's pullback, look no further than the stock's 14-Day Relative Strength Index (RSI). It closed on Friday at 74, firmly in overbought territory -- indicating today's dip may have already been in the cards.


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