Eleventh-Hour Call Buyers Target Amgen Inc. (AMGN)

Amgen, Inc. (AMGN) calls continue to be popular

by

Published on Mar 20, 2015 at 11:40 AM
Updated on Apr 20, 2015 at 5:32 PM

Amgen, Inc.'s (NASDAQ:AMGN) attempt to block a biosimilar of its Neuopogen infection-prevention drug -- which is manufactured by Novartis AG (ADR) (NYSE:NVS) -- was rejected by a U.S. judge. AMGN shares, however, appear unfazed, up 0.8% at $170.51 -- and traders are flocking to the stock's options pits to wager on additional upside.

Diving right in, AMGN's intraday call volume quadruples the typical amount, and more than doubles the number of puts on the tape. Seeing the most attention is the March 165 call, where it seems traders are buying new positions, in hopes the stock will extend its lead north of $165 through tonight's close, when the front-month options expire. Based on the call's volume-weighted average price (VWAP) of $7, breakeven on the trade is $172 (strike plus VWAP).

Shifting our attention, AMGN is a long-term technical outperformer. On a year-over-year basis, the shares have jumped nearly 39% -- and are now within striking distance of their record peak of $173.14, touched in early December.

Taking a step back, today's preference for long calls echoes the withstanding trend witnessed in AMGN's options pits. Specifically, the equity's 10-day call/put volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is 2.12, with long calls more than doubling puts. What's more, the ratio is higher than 87% of comparable readings from the previous 52 weeks.

In other news, a joint venture between Amgen, Inc. (NASDAQ:AMGN) and Astellas Pharma Inc. has submitted an application to Japan's Ministry of Health, Labour and Welfare, seeking marketing approval for the cholesterol-fighting drug Repatha. The treatment is still awaiting approval in the U.S. and Europe.


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