Is Sentiment Shifting in Biogen Idec Inc.'s (BIIB) Options Pits?

Biogen Idec Inc (BIIB) reports fourth-quarter earnings next week

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Published on Jan 21, 2015 at 9:58 AM
Updated on Apr 20, 2015 at 5:32 PM

Biogen Idec Inc (NASDAQ:BIIB) surged on Tuesday, adding 3% to settle at $363.28 -- an all-time closing high. However, despite the stock's long-term uptrend, puts remain the options of choice. BIIB's Schaeffer's put/call open interest ratio (SOIR) comes in at 1.23, in the 99th percentile of its annual range. This suggests near-term speculators have only been more put-skewed 1% of the time in the past 52 weeks. But, considering BIIB's technical tenacity, some of these puts may have been purchased by shareholders looking for a short-term hedge.

Sentiment could be shifting to the bullish side, though. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day call/put volume ratio of 1.56 stands higher than 93% of all other readings from the past year. In other words, option buyers have initiated bullish bets over bearish at a faster-than-usual clip during the past 10 weeks.

The sentiment among brokerage firms also paints a more positive light on Biogen Idec Inc (NASDAQ:BIIB), as 13 out of 18 covering analysts rate it a "buy" or better. Again, this isn't too surprising, given the security's technical strength. In the past two months, BIIB has outperformed the S&P 500 Index (SPX) by roughly 23 percentage points, and recently bounced off support from its 30-day moving average. BIIB, which was last seen 1% lower at $359.58, is scheduled to report its fourth-quarter earnings next Wednesday morning.

Daily Chart of BIIB Since Dec. 5, 2014

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