Momenta Pharmaceuticals, Inc. (MNTA) Mobbed By Option Bulls

Momenta Pharmaceuticals, Inc. (MNTA) is enjoying a regulatory-inspired rally, enticing option bulls

by Andrea Kramer

Published on Apr 16, 2015 at 2:22 PM
Updated on Jun 24, 2020 at 10:16 AM

A regulatory nod has sent Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA) soaring, with the stock peaking north of $20 for the first time in three years. MNTA was last seen 9.3% higher at $17.59, and option buyers are betting bullishly.

Call volume has skyrocketed to 21 times the average intraday pace, with more than 3,500 contracts exchanged -- about 10 times the number of puts. Most popular is the June 15 call, where potential buy-to-open activity has been detected. By purchasing the calls to open, the buyers expect MNTA to extend its trek atop $15 through the close on Friday, June 19, when the options expire.

More aggressive bulls are buying to open the April 17 and 18 calls, which have just over a session of life left. The volume-weighted average price (VWAP) of the 17-strike call is $0.86, making breakeven $17.86 (strike plus VWAP). Likewise, the VWAP of the at-the-money 18-strike call is $0.66, meaning the buyers' profit will increase the higher MNTA surges north of $18.66 by tomorrow's close, when front-month options expire.

Outside of the options pits, Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA) shorts could be feeling the heat. Short interest accounts for 14.7% of the equity's total available float, and would take about two weeks to repurchase, at the stock's average pace of trading. Should the shorts hit the exits in the wake of the FDA's approval of MNTA's MS drug -- a generic version of Teva Pharmaceutical Industries Ltd's (ADR) (NYSE:TEVA) Copaxone -- a short-covering rally could usher the shares even higher.


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