Successful COVID-19 Vaccine Trial Triggers AZN Options Frenzy

AZN call traders are targeting big weekly gains

Digital Content Manager
Jul 20, 2020 at 2:31 PM
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The shares of AstraZeneca plc (NYSE:AZN) are down 4.2% at $58.55 this afternoon, despite earlier hitting an all-time-high of $64.94 out of the gate today. The volatile price action comes after the British drugmaker announced the potential COVID-19 vaccine it is producing with the University of Oxford generated a robust immune response in all participants of an early-stage clinical trial. A researcher also said the company is on track to deliver over a million vaccine doses by September, and that this could be a "remarkable underestimate," depending on how quickly late-stage trials are completed. 

Today's news further positions AZN ahead in the race for a coronavirus vaccine. It's been a volatile five-day stretch for the stock; gapping higher by 6.3% and 7.4% respectively on Friday and Wednesday of last week. Before this jump, however, the equity had added 62% from its mid-March lows near the $36 level. Shares have been relying on support from their 60-day moving average since April, though overhead pressure at the $55 level had kept the stock from pushing higher over the past couple of weeks. Now, shares have broken north of the 10-day moving average, leading to AZN's 47.3% year-over-year tally.


Analysts were overwhelmingly optimistic toward AZN coming into today, with five of six in coverage considering it a "strong buy," and only one calling it a "hold." Meanwhile, the stock's 12-month consensus target price of $56.65 is a 4.3% discount to current levels, suggesting there is room for bull notes to come through and push AZN higher.

This upbeat sentiment has carried through to the options pits, where calls are clearly preferred. In the last 50 days, 22.62 calls were bought for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 92% of readings from the past year, meaning calls are being picked up at a faster-than-usual clip.

Today's trading leans even more bullish. At last check, calls were being traded at eight times the average intraday amount, and ten times the number of puts. Most popular by far is the weekly 7/24 70-strike call, with new positions being opened. Buyers of this call are banking on more gains from AZN stock by the end of the week, when the options expire.


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