Can Arrowhead Research Corporation Finally Conquer $8?

Arrowhead Research Corp (ARWR) call options remain hot

Apr 2, 2015 at 2:02 PM
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Option players have upped the bullish ante on biopharmaceutical concern Arrowhead Research Corp (NASDAQ:ARWR) lately. During the past two weeks, traders have bought to open 19.3 ARWR calls for every put on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) -- a ratio higher than 99% of all other readings from the past year. What's more, speculators today are following suit, with calls crossing at eight times the average afternoon clip.

Buy-to-open action has been detected at the June 12 and 14 calls, as well as the May 11 call. By purchasing the contracts to open, the buyers expect ARWR to muscle north of the strikes by the calls' respective expiration dates of Friday, June 19, and Friday, May 15. ARWR was last seen 3.5% higher at $7.69, and hasn't explored double-digit territory since before an early October bear gap.

Just yesterday, ARWR saw more than 5,000 April 8 calls opened, likely on the buy side. This strike is now home to peak call open interest in the front-month series, and could act as an added layer of short-term congestion in the $8 region. This area acted as a roadblock for the shares in early 2015, and re-emerged as a speed bump in mid-to-late February.

Daily Chart of ARWR since September 2014

Elsewhere, it's worth noting that short interest accounts for nearly 31% of Arrowhead Research Corp's (NASDAQ:ARWR) total available float, and would take more than eight sessions to buy back, at the security's average pace of trading. As such, it's possible that some of the recent call buying -- particularly at out-of-the-money strikes like the aforementioned June 12 and 14 calls -- could be attributable to short sellers looking for a hedge.

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