Novavax Stock Nosedives on Vaccine Production Delays

Options volume is running at seven times the intraday average

Digital Content Manager
Oct 20, 2021 at 10:42 AM
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Biotechnology name Novavax, Inc. (NASDAQ:NVAX) is plummeting this morning, last seen down 18.3% to trade a $131.18. This selloff comes on the heels of a Politico report that said the company is experiencing producton delays after the methods used to test the purity of its Covid-19 vaccine fell short of U.S. regulators' standards. Nonetheless, Novavax still expects to file for emergency use authorization before the end of 2021.

Just over one month ago, Novavax stock was eyeing a bounce off the 40-day moving average. Shares have since fallen well below this trendline in recent weeks, and today have breached a short-term floor at the $160 mark to trade at their lowest level since May. Year-over-year, though, NVAX is still up 39.6%. 

Short sellers have been piling on the security. Short interest rose 13.4% over the last two reporting periods, and the 6.68 million shares sold short now account for 9% of the NVAX's available float.

Analysts are bullish towards the equity. Of the six in coverage, four still call it a "strong buy," while the 12-month consensus target of $264.20 is a whopping 91.6% premium to current levels, indicating NVAX may be overdue for a round of downgrades and/or price-target cuts.

The options echo that optimism. This is per Novavax stock's 50-day call/put volume ratio of 2.49 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than all readings from the last 12 months. This means long puts have been getting picked up at a faster-than-usual clip.  

Driling down to today's options activity, 46,000 calls and 33,000 puts have crossed the tape, or seven times the intraday average. Most popular is the weekly 10/22 110-strike put, followed by the 140-strike call in the same series, with new positions being opened at both.

It is also worth noting the security has exceeded options traders' volatility expectations in the past year, per NVAX's Schaeffer's Volatility Scorecard (SVS), which sits at 88 out of a possible 100.

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