Biotech Stock Plummets After Halving Workforce

Put volume is today running at 28 times the intraday average volume

Digital Content Manager
Aug 14, 2023 at 10:26 AM
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BioXcel Therapeutics Inc (NASDAQ:BTAI) is plummeting, last seen down 46.3% to trade at $3.98 after its second-quarter earnings report. The drugmaker said it will reduce its workforce by 50% to 80 employees as it shifts focus to the development of BXCL501, a treatment that is being tested for agitation related to schizophrenia, bipolar disorders, and dementia due to probable Alzheimer's disease.

This negative price action just knocked BTAI into penny stock territory. The shares are now trading at a roughly four-year low, and face overhead pressure from the descending 20-day moving average. Today eyeing its biggest single-day percentage drop since June 29, the stock is down 81.7% in 2023.

The equity's usually quiet options pits are exploding with activity today. So far, 1,226 puts have exchanged hands -- 28 times the intraday average volume -- compared to only 303 calls. The August 2.50 put is by far the most popular contract, with new positions being opened there.

A round of upgrades could pressure BTAI even lower, as five of the  eight analysts in coverage still call it "strong buy." Meanwhile, short sellers are having a field day. The 7.04 million shares sold short account for a hefty 35% of the security's available float.

At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day put/call volume ratio sits higher than 81% of readings from the past 12 months. This means long puts have been much more popular than usual.


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