Amgen Inc. (AMGN), AstraZeneca PLC (AZN) Drug Data Lures Bulls

Amgen, Inc. (AMGN) and AstraZeneca plc (ADR) (AZN) both posted solid trial results


Published on Mar 16, 2015 at 2:19 PM
Updated on Apr 20, 2015 at 5:32 PM

Biotech issues Amgen, Inc. (NASDAQ:AMGN) and AstraZeneca plc (ADR) (NYSE:AZN) are both cruising higher on positive drug trial results. As such, option bulls have taken notice of the stocks.

For starters, AMGN -- much like rival Regeneron Pharmaceuticals Inc (NASDAQ:REGN) -- has surged nearly 5% to trade at $161.84, following positive results for its cholesterol treatment, Repatha. What's more, today's bull gap has the shares back in positive year-to-date territory.

Not surprisingly, AMGN calls are flying off the shelves, at nearly five times the usual rate for this point in the day. Digging deeper, buy-to-open activity is detected at the March 160 call. In other words, these speculators anticipate AMGN will extend its lead north of $160 by week's end, when front-month options expire.

Daily Chart of AMGN since January 2015

Meanwhile, AZN has popped 2.4% to wink at $68.97, as traders react positively to the latest findings from the company's Brilinta heart drug study. However, it should be noted that Credit Suisse followed the lead of Leerink, cutting the stock's price target to 4,320P from 4,670P, and reiterating a "neutral" rating.

In the options pits, AZN calls are crossing at quadruple the usual intraday clip. Speculators are buying to open the security's April 72.50 call, hopeful the shares will take out $72.50 by the close on Friday, April 17, when the back-month options expire.

Historically speaking, it's been a disappointing year for AZN. The stock is down 2% in 2015, and hasn't traded north of $72.50 since late December.

Taking a step back, today's preference for calls over puts is common to both Amgen, Inc. (NASDAQ:AMGN) and AstraZeneca plc (NYSE:AZN), based on the last couple week's worth of data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, AMGN's 10-day call/put volume ratio across this trio of exchanges is 2.22, which ranks higher than 89% of comparable readings from the past year. Similarly, AZN's 10-day call/put volume ratio of 19.72 is just 3 percentage points from a 12-month peak.

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