Calls Hot as ACADIA Pharmaceuticals Inc. (ACAD) Explores New Territory

ACADIA Pharmaceuticals Inc. (ACAD) hit its highest perch on record earlier

by Karee Venema

Published on Mar 10, 2015 at 1:52 PM
Updated on Apr 20, 2015 at 5:32 PM

Despite a broad-market bloodbath, ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is continuing its hunt for higher highs today. The stock topped out at a record peak of $44.55 earlier, and was last seen up 13.8% at $44.29. Options traders are responding in kind, with calls crossing the tape at nearly eight times what's typically seen at this point in the day, and outpacing puts by a more than 3-to-1 margin.

What's more, traders are paying particular attention to ACAD's short-term contracts, per the equity's 30-day at-the-money implied volatility, which is up 41.3% at 72.6%, after earlier hitting an annual high. Drilling down, the security's March 44 and 45 calls have received the most attention, and all signs suggest new positions are being purchased here. By buying the calls to open, speculators expect ACAD to rally above the respective strikes -- and into uncharted territory -- by next Friday's close, when front-month options expire.

Today's preference for calls over puts is nothing new for a stock that's tacked on nearly 40% year-to-date. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ACAD's 50-day call/put volume ratio of 6.55 ranks in the 85th annual percentile. Simply stated, calls have been bought to open over puts at a faster-than-usual clip in recent months.

Outside of the options pits, however, short interest accounts for 20.8% of the equity's available float, and would take three weeks to cover, at average daily trading volumes. In light of this -- and with no apparent news driving today's price action -- it could be that a short-covering rally is underway on ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD).


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