Fire Sale on Inovio Pharmaceuticals, Inc. (INO) Options

Inovio Pharmaceuticals Inc's (INO) front-month options are relatively inexpensive at the moment

Feb 4, 2015 at 2:20 PM
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Biotechs are having a bad day, and Inovio Pharmaceuticals Inc (NASDAQ:INO) is no exception. The stock is off 3.6% at $7.99, and on pace for its lowest daily settlement since May 23. Against this backdrop, option volume has exploded to almost four times what's typically seen at this point in the day, with puts outpacing calls by a more than 2-to-1 margin.

Today's put-skewed session marks a change of pace for INO options traders. Over the past 50 days, for instance, speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 3.22 calls for every put. Echoing this is INO's Schaeffer's put/call open interest ratio (SOIR) of 0.58, which indicates call open interest outweighs put open interest among options set to expire in three months or less.

Outside of the options arena, speculators have taken a more skeptical stance. In fact, short interest accounts for more than one-fifth of the stock's available float. As such, it's possible that a portion of the recent call buying may be a result of short sellers hedging their bearish bets.

Regardless, now is an opportune time to purchase near-term options on INO. The security's Schaeffer's Volatility Index (SVI) of 58% sits lower than 94% of similar readings taken in the past year, meaning the equity's front-month options are pricing in low volatility expectations.

Technically speaking, today's move lower is just more of the same for a stock that's shed nearly 20% over the past 52 weeks. More recently, Inovio Pharmaceuticals Inc (NASDAQ:INO) has lagged the broader S&P 500 Index (SPX) by more than 25 percentage points over the past three months.

 

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