GWPH Drug Data Has Call Players Piling On

GW Pharmaceuticals PLC - ADR (GWPH) call volume is trading at six times the average intraday pace

Apr 14, 2015 at 12:24 PM
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GW Pharmaceuticals PLC - ADR (NASDAQ:GWPH) is up 8.2% at $104.05 -- and back in triple-digit territory for the first time since mid-March -- on news its epilepsy drug, epidiolex, showed promise in reducing the number of seizures of those taking the treatment. Additionally, the equity received price-target hikes at Leerink (to $120) and Peel Hunt (to 530p), while Cowen and Company waxed optimistic over drug data. In GWPH's options pits, meanwhile, calls are trading at nearly six times the average intraday rate, and outpacing puts by a more than 3-to-1 margin.

Receiving notable attention is GWPH's April 105 call, where it appears some new positions are being purchased. If traders are indeed buying to open calls here, the goal is for the security to rally above $105 -- territory not seen since last July -- by week's end, when the front-month options expire. Amid today's pop, delta on the call has jumped to 0.45 from 0.12 at last night's close, suggesting an increased probability of an in-the-money finish.

From a wider sentiment perspective, today's accelerated call activity marks a change of pace in GWPH's options arena. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 0.95 ranks in the 74th annual percentile. This skepticism is seen elsewhere on the Street, as well, with short interest accounting for a lofty 12% of the equity's available float.

Technically speaking, GWPH has been a standout, more than doubling on a year-over-year basis, and adding roughly 54% in 2015 alone. Should the shares extend this momentum, a capitulation from some of the weaker bearish hands could translate into a fresh burst of buying power for GW Pharmaceuticals PLC (NASDAQ:GWPH).


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