Options Check-Up: MannKind Corporation, OPKO Health Inc., Shire plc

Analyzing recent option activity on MannKind Corporation (MNKD), Opko Health Inc. (OPK), and Shire PLC (ADR) (SHPG)

by Griffin Kruse

Published on Feb 6, 2015 at 8:34 AM
Updated on Apr 20, 2015 at 5:32 PM

Among the stocks attracting attention from options traders lately are biopharmaceutical firms MannKind Corporation (NASDAQ:MNKD), Opko Health Inc. (NYSE:OPK), and Shire PLC (ADR) (NASDAQ:SHPG). Below, we'll break down how options traders are positioning themselves, and how much speculators are willing to pay for their bets on MNKD, OPK, and SHPG.

  • MNKD gained 4.3% yesterday to reach $7.10. Year-to-date, the shares have advanced an impressive 36%, and sentiment in MannKind Corporation's options pits is optimistic. The stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 3.06 sitting in the 76th percentile of its annual range. However, 29.6% of MNKD's available float is sold short -- which would take over 17 days to cover at average volumes -- and a portion of this call buying could be at the hands of short sellers hedging against additional upside. What's more, traders are paying bottom-of-the-barrel prices for their near-term bets on MNKD, with its Schaeffer's Volatility Index (SVI) of 65% sitting just 6 percentage points away from a 52-week low.

  • Sector peer OPK also notched solid gains, adding 5.5% to hit $13.47 -- and tagged a record peak of $13.54 -- after chairman and CEO Dr. Phillip Frost said he has stepped down as chairman of Teva Pharmaceutical Industries Ltd's (ADR) (NYSE:TEVA) board of directors, effective immediately. On the charts, shares of Opko Health Inc. have skyrocketed since announcing a deal with Pfizer Inc. (NYSE:PFE) in mid-December, gaining over 52%. Accordingly, sentiment in the stock's options pits is bullish, with its 50-day ISE/CBOE/PHLX call/put volume ratio of 7.27 standing just six percentage points away from an annual high. But, like with MNKD, nearly 20% of the stock's available float is sold short, representing almost 19 days' worth of pent-up buying power, and a portion of these calls could be a result of short sellers protecting their bearish bets. Short-term options for OPK are slightly less expensive than usual, per its SVI of 43%, which is in the 39th percentile of its annual range.

  • SHPG advanced 1.9% yesterday to reach $228.42, bringing its year-over-year gain to 48.6%. Despite Shire PLC's technical tenacity, sentiment in the security's options pits is still bearish ahead of next week's earnings report (scheduled for the morning of Thursday, Feb. 12). Specifically, SHPG's 50-day ISE/CBOE/PHLX put/call volume ratio of 1.07 sits just 5 percentage points away from a 12-month peak. Traders are paying relatively tame prices for their near-term bets on the stock, as SHPG's 30-day at-the-money implied volatility of 31.6% sits in the 55th percentile of its annual range.

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