MannKind Corporation (MNKD) Pop Fails to Deter Doubters

MannKind Corporation (MNKD) has seen high levels of put buying and short selling of late

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Published on Feb 10, 2015 at 10:31 AM
Updated on Apr 20, 2015 at 5:32 PM

MannKind Corporation (NASDAQ:MNKD) has tacked on 4% today to trade at $7.81, despite the absence of a clear driver. Year-to-date, the shares have now advanced roughly 50%. Nevertheless, options traders are striking a decidedly skeptical stance this morning.

Diving right in, MNKD puts are trading at four times the expected intraday rate. Far and away the stock's most active strike is the deep in-the-money May 12 put, which speculators are buying to open in the hopes of a pullback by the close on Friday, May 15 -- when the contracts expire.

Puts have been the options of choice in recent weeks, as well. MNKD's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.89 ranks in the 88th percentile of its annual range. In like manner, the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.00 stands above 86% of all other comparable readings from the past year. Of course, given MNKD's technical tenacity, a portion of these bearish bets may have been initiated by shareholders seeking a downside hedge.

However, one group that's unmistakably skeptical of the stock is short sellers. Nearly 30% of MannKind Corporation's (NASDAQ:MNKD) float is sold short, which would take more than three weeks to cover, at typical daily trading volumes.


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