Calls are tremendously popular today
As the coronavirus spreads from Asia to the U.S., putting the world on high alert, help could soon be on the way. Biopharmaceutical name Moderna Inc (NASDAQ:MRNA) confirmed this morning that it was working with national agencies on developing a potential vaccine to the infection. Moderna -- which is also developing vaccines for the Zika virus and herpes -- will use its mRNA vaccine technology to quickly respond to such new threats.
In response, Moderna stock is up 10.2% to trade at $23.08, trading at their highest point since late May. The shares have now more than doubled since their Aug. 7 bottom of $11.54, and recent support has emerged at their newly formed 200-day moving average.
An exodus of short sellers could help MRNA chase down its April 8 record high of $29.79. Short interest increased by 30% in the most recent reporting period, and now accounts for 9.4% of the stock's total available float. At its average pace of trading, it would take shorts nearly 12 days to buy back their bearish bets.
In the options pits, calls are supremely popular, despite limited absolute volume. In the last 10 days, 3,477 calls have been bought at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to just 185 puts. This ratio ranks in the elevated 75th annual percentile, indicating that such a skew is rare. However, given the amount of short interest tied up in the stock, it's possible some of this call buying could be shorts seeking an options hedge against any unexpected upside.
Today is more of the same. Already, over 3,000 MRNA calls have changed hands, 15 times the average intraday amount and volume pacing for the 100th percentile of its annual range. Leading the charge is the February 25 call, where new positions are being opened.