Diplomat Pharmacy, Inc. (DPLO) Reversal Has Options Traders Circling

Diplomat Pharmacy Inc (DPLO) hit an all-time peak earlier

by Karee Venema

Published on Mar 26, 2015 at 1:44 PM
Updated on Apr 20, 2015 at 5:09 PM

Diplomat Pharmacy Inc (NYSE:DPLO) was down in electronic trading, after the firm priced its follow-on stock offering at $29 per share -- a discount to last night's close. However, the equity quickly reversed course, and was last seen up 14% at $34.54, hitting a record high of $34.90 along the way. This volatile price action has sparked a rush of activity in the equity's options pits, with contracts crossing the tape at 11 times the average intraday rate.

Calls have emerged as the options of choice, and are outpacing puts by a roughly 2-to-1 margin. Traders have set their sights on another all-time peak -- with buy-to-open activity possibly occurring at DPLO's April and August 35 calls. For those purchasing new positions, the goal is for the security to rally above the strike by the respective expiration dates.

From a wider perspective, sentiment is generally optimistic toward a stock that's more than doubled since going public on Oct. 10. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, speculators have bought to open 2.21 calls for every put over the past two weeks.

Elsewhere, four of six covering analysts maintain a "strong buy" rating on the equity, versus two "holds." However, Diplomat Pharmacy Inc's (NYSE:DPLO) average 12-month price target of $33.67 sits below current trading levels, meaning there's room for a round of price-target hikes, should the shares maintain their upward trajectory.


A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earning announcements before it's too late!


 
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


Look Who's Going Bankrupt Next in America
Porter Stansberry is making a concerning prediction.
First Week in April Provides More Coronavirus-Related Volatility
A slew of coronavirus-related news sent markets on another weekly roller coaster ride
Netflix Stock Heading into Historically Bullish Quarter
NFLX's 10-day moving average has stepped up as support lately
Look Who's Going Bankrupt Next in America
Porter Stansberry is making a concerning prediction.