Surging NewLink Genetics Corporation (NLNK) Can't Shake Skeptics

Option bears aren't sold on rallying NewLink Genetics Corp (NLNK)

by Alex Eppstein

Published on May 5, 2015 at 11:54 AM
Updated on Jun 24, 2020 at 10:16 AM

solid turn in the earnings confessional has shares of NewLink Genetics Corp (NASDAQ:NLNK) sitting 5.2% higher at $47. Year-over-year, the shares have now advanced an impressive 117%, and continue to find support atop their 100-day moving average. However, one group of options traders isn't buying the hype.

Taking a quick step back, NLNK puts are crossing at six times the usual intraday clip. Most active by far is the May 44 put, where new contracts are being purchased. In other words, these option bears think the biopharmaceutical stock will retreat below $44 by next Friday's close -- when front-month contracts expire.

This pessimism is par for the course. During the past 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NLNK has amassed a put/call volume ratio of 0.54, which rests just 2 percentage points from a 12-month peak. Given the stock's outstanding technicals, a portion of these long puts -- especially at out-of-the-money strikes -- may have been initiated by shareholders seeking downside protection.

Echoing the aforementioned put-bias is NewLink Genetics Corp's (NASDAQ:NLNK) Schaeffer's put/call open interest ratio (SOIR) of 0.73, which ranks in the 88th percentile of its annual range. In other words, short-term puts outnumber calls by a bigger-than-usual margin, among options expiring in the next three months.

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