Sarepta Therapeutics Inc. (SRPT) Option Bulls Cheer CEO Resignation

Sarepta Therapeutics Inc (SRPT) is surging in the wake of a management shake-up

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Published on Apr 1, 2015 at 10:46 AM
Updated on Apr 20, 2015 at 5:32 PM

Sarepta Therapeutics Inc (NASDAQ:SRPT) has popped 5.4% this morning to trade at $13.99, following the resignation of CEO Chris Garabedian. This represents a break from the stock's longer-term trend, as the shares were down 48.3% year-over-year heading into today. However, one group that may have been anticipating a move higher is call buyers.

During the past two weeks on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open more than 3,600 SRPT calls versus fewer than 40 puts. The resultant 10-day call/put volume ratio of 97.46 rests just 1 percentage point from a 12-month high.

Echoing this is the equity's Schaeffer's put/call open interest ratio (SOIR), which registers at an annual low of 0.22. In other words, during the past 52 weeks, short-term call open interest has never outweighed put open interest by a greater margin.

That said, the heavy attention being paid to SRPT calls isn't necessarily an indication of bullish sentiment. Short interest represents a lofty 36.7% of the stock's available float, which is roughly equal to 23 days' worth of trading activity, given average volumes. Put differently, it's possible recent call buyers were short sellers in disguise.

No matter what the case may be, Sarepta Therapeutics Inc (NASDAQ:SRPT) option buyers can rest easy knowing contracts can be had on the cheap right now. The equity's Schaeffer's Volatility Index (SVI) of 92% sits below two-thirds of comparable readings taken in the last year.


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