MRNA Surges to Record High on Plans to Join S&P 500

There is still plenty of pessimism surrounding the stock

Digital Content Manager
Jul 16, 2021 at 9:37 AM
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Pharmaceutical name Moderna Inc (NASDAQ:MRNA) is surging this morning, up 7.8% at $279.95 at last check, after earlier nabbing an all-time high of $280.50. Today's bull gap comes after news that the company will join the S&P 500 (SPX) on July 21, replacing Alexion Pharmaceuticals (ALXN), which will merge with British drug maker AstraZeneca (AZN) next week. 

The security has seen tremendous success since the U.S. Federal Drug Administration approved its Covid-19 vaccine for emergency use. After tearing up the charts for much of the past 12 months, shares earlier this week overcame resistance at the $245 mark, with support from the 20-day moving average. Year-over-year, MRNA boasts a 223.7% lead.

Despite this positive price action, the majority of analysts are bearish towards Moderna stock. Of the 13 in question, eight still carry a tepid "hold" or worse rating, while five say "strong buy." Plus, the 12-month consensus target price of $191.08 is a 31.4% discount to last night's close, suggesting the equity may be overdue for a fresh round of upgrades and/or price-target hikes. 

Moderna stock could also benefit from a shift in sentiment in the options pits, which reflect that pessimism. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MRNA sports a 50-day put/call volume ratio that stands higher than 93% of readings from the last year. This means long puts are being picked up at a faster-than-usual pace.

Echoing this, the equity's Schaeffer's put/call open interest ratio (SOIR) sits higher than 80% of readings from the past 12 months. In simpler terms, short-term options traders have rarely been more put-biased. 

Now may be the right time to speculate on Moderna stock's next move with options. The equity's Schaeffer's Volatility Index (SVI) of 66% sits in the 14th percentile of readings in its annual range, indicating options players are pricing in low volatility expectations at the moment. Plus, the equity's Schaeffer's Volatility Scorecard (SVS) sits at 98 out of 100. This suggests the stock has exceeded these volatility expectations during the past year -- a boon for premium buyers.


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