Are ACADIA Pharmaceuticals Inc. (ACAD) Shorts Feeling the Heat?

ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is extending its quest for all-time highs, peaking at $40.25 earlier. At last check, the shares were 4.2% higher at $39.75, and option players are rolling the dice on even more upside for the drugmaker.

ACAD call volume is running at three times the average midday pace, and has more than doubled put volume thus far. Potential buy-to-open activity has been detected at the March 40 and April 38 calls, which are most popular on the day. By purchasing the former, the buyers expect ACAD to extend its journey north of $40 by the close on Friday, March 20, when front-month options expire. The April 38 call buyers are slightly more conservative, gambling on ACAD to continue its ascent north of $38 over the next six weeks.

Digging even deeper, the volume-weighted average price (VWAP) of the front-month calls is $1.61, meaning the buyers will start to profit if ACAD topples $41.61 (strike plus VWAP) by options expiration. Meanwhile, the VWAP of the back-month calls is $3.32, putting at-expiration breakeven at $41.32.

Despite ACADIA Pharmaceuticals Inc.'s (NASDAQ:ACAD) record-setting ascent, there's still plenty of room on the bullish bandwagon. While analysts are waxing optimistic, short sellers are likely feeling the heat. Short interest represents 20.8% of ACAD's total available float, which would take three weeks to buy back, at the stock's average pace of trading. A continued short squeeze could propel the shares even higher.