Last-Minute Put Buyers Flock to ARIAD Pharmaceuticals, Inc. (ARIA)

Ariad Pharmaceuticals, Inc. (ARIA) is surrounded by skepticism

by Alex Eppstein

Published on May 15, 2015 at 2:29 PM
Updated on Jun 24, 2020 at 10:16 AM

Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) is down 1.8% this afternoon to trade at $8.75, but remains a long-term outperformer -- up more than 27% in 2015. At present, the shares are also testing support atop their 40-day moving average. Meanwhile, in options land, puts are flying off the shelves at more than triple the expected amount at this point in the session.

Diving right in, last-minute option bears are pouncing on ARIA puts. Specifically, traders may be buying to open the in-the-money May 9, 9.50, and 10 strikes, expecting the pharmaceutical stock to continue its descent through today's close, when front-month options expire.

This skepticism is par for the course. ARIA's 10-day put/call volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is 0.32, in the 89th annual percentile. Of course, it's possible some of these puts were purchased by shareholders as protection.

Elsewhere, short interest represents more than one-quarter of Ariad Pharmaceuticals, Inc.'s (NASDAQ:ARIA) total float. At the stock's average daily trading rate, it would take more than seven sessions to repurchase these bets.

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