Merrimack Pharmaceuticals Bulls Take Aim Uncharted Waters

Merrimack Pharmaceuticals Inc (MACK) calls are trading at 33 times the average intraday pace

Apr 10, 2015 at 3:13 PM
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Unlike fellow drugmaker MannKind Corporation (NASDAQ:MNKD), a bigwig at Merrimack Pharmaceuticals Inc (NASDAQ:MACK) expressed confidence in the stock by scooping up 85,000 shares, and as a result, the security is 2% higher this afternoon at $12.24. Option traders are responding in kind, with calls trading at 33 times the average intraday rate, and outpacing puts by a roughly 20-to-1 margin.

Drilling down, MACK's most active option by a mile is the May 13 call, where it seems safe to assume new positions are being purchased. By buying the calls to open, traders expect the equity to rally above $13 by the close on Friday, May 15 -- when back-month options expire. While MACK has yet to see the north side of $13, the equity hit an intraday high of $12.49 earlier -- a penny shy of its March 5 all-time peak.

Outside of the options pits, traders have taken a more skeptical tone. Short interest, for example, surged 11.2% in the last two reporting periods, and now accounts for a lofty 19.4% of the equity's available float. At MACK's average daily pace of trading, it would take nearly 12 sessions to cover all of these bearish bets.

As noted, MACK has been a technical beast. In addition to lingering in record-high territory, the equity has tacked on roughly 159% over the past 52 weeks. Should Merrimack Pharmaceuticals Inc (NASDAQ:MACK) extend its momentum, a short-covering rally could ensue. Off the charts, the biopharmaceutical firm is slated to present at the 2015 American Association for Cancer Research (AACR) Annual Meeting on Monday, April 20, and Tuesday, April 21.

Daily Chart of MACK Since April 2014
 

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