Skeptics Bank on a WuXi PharmaTech (Cayman) Inc. (WX) Pullback

WuXi PharmaTech (Cayman) Inc.'s (ADR) (NYSE:WX) December 45 put is being bought to open

Apr 30, 2015 at 11:05 AM
facebook twitter linkedin

WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX) is fresh off a seven-year high of $45 -- and was last seen 11.4% higher at $44 -- after the R&D firm announced it has received an offer to go private. Not surprisingly, intraday options volume has exploded to 23 times the norm.

Receiving notable attention is WX's December 45 put, and all indications point to buy-to-open activity. In short, these traders expect the shares will reverse lower by December options expiration. The volume-weighted average price (VWAP) on the in-the-money puts is $2.12, yielding a breakeven mark of $42.88 (strike less VWAP).

In recent months, calls have been the options of choice on WX. The stock's 50-day call/put volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is 7.22, which ranks higher than 93% of comparable readings from the past year.

As alluded to, WuXi PharmaTech Inc. (NYSE:WX) has been strong on the charts. Taking into account today's massive gains, the equity is staring at a year-to-date lead of roughly 31%, and is exploring territory not charted since October 2007.

Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

Schaeffer's Daily Bulletin Offer


Special Offers from Schaeffer's Trading Partners