Option Bulls Mob Merrimack Pharmaceuticals, Inc. (MACK)

Analysts are extremely bullish on Merrimack Pharmaceuticals Inc (MACK)


Published on Apr 13, 2015 at 2:23 PM
Updated on Apr 20, 2015 at 5:32 PM

Merrimack Pharmaceuticals Inc (NASDAQ:MACK) is sharply higher this afternoon -- though a specific driver isn't clear. At last check, the stock was up 6.3% at $12.94, and earlier topped out at a record $13.15. Not surprisingly, bullish options traders have been getting in on the action.

Diving right in, intraday option volume is at quadruple the norm, and calls are outstripping puts by an almost 6-to-1 count. What's more, MACK's 30-day at-the-money implied volatility has surged 5.5% to 99%, hinting at increased demand for short-term strikes.

One strike that may be seeing some buy-to-open activity is the in-the-money April 12 call. By purchasing these positions, traders anticipate MACK will extend its lead over the strike through Friday's close, when the front-month options expire. Based on the volume-weighted average price (VWAP) of $1.01, breakeven on the trade is just a chip-shot away at $13.01 (strike plus VWAP).

Elsewhere on the sentiment front, the analyst crowd is all-in on MACK. In fact, each of the five brokerage firms tracking the shares rate them a "strong buy."

On the flip side, there's plenty of short interest on Merrimack Pharmaceuticals Inc (NASDAQ:MACK). Over 17% of the equity's float is sold short, which would take more than two weeks to buy back, assuming typical daily trading volumes. In fact, some of today's upside may be attributable to short-covering activity.

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