Achillion Pharmaceuticals, Inc. (ACHN) Options In Demand as Stock Rallies

Achillion Pharmaceuticals, Inc. (ACHN) reportedly canceled a conference appearance, sending the shares (and option volume) soaring

May 18, 2015 at 1:57 PM
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Biotech issue Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) zoomed higher around midday, amid reports the company canceled a presentation at today's UBS Global Healthcare Conference.  At last look, the stock was up 11% at $10.62. Against this backdrop, ACHN options are in demand, trading at 12 times the average intraday pace. What's more, the stock's 30-day at-the-money implied volatility rocketed 49.1% higher to 85%. 

ACHN calls have outnumbered puts by a more than 5-to-1 margin, with roughly 28,000 contracts exchanged. Most active is the equity's out-of-the-money September 15 call, where more than 8,000 contracts have traded. Digging deeper, a healthy portion of the calls appear to have been bought to open, suggesting the buyers are expecting ACHN to muscle north of the strike -- a rally of 41.2% from the stock's current price -- by the close on Friday, Sept. 18, when the options expire. 

However, considering 15.4% of ACHN's float is dedicated to short interest -- representing six sessions' worth of pent-up buying demand, at the equity's average pace of trading -- it's possible that the appetite for out-of-the-money calls could be attributable to short sellers seeking near-term protection. 

Whatever the motive, today's affinity for long calls is just more of the same for ACHN. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio sits at a whopping 17.98 -- higher than 94% of all other readings from the past year. Furthermore, short-term traders have been picking up ACHN options at a relative steal; the security's Schaeffer's Volatility Index (SVI) of 58% is lower than 99% of all other readings from the past year. 

Technically speaking, Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) is on pace to end in double-digit territory for the first time since April 24. Furthermore, the stock is set to topple its 50-day moving average for the first time since Feb. 3, but remains 13.3% lower year-to-date.

 

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