ACADIA Pharma, ARIAD Pharma Mobbed by Option Bulls

Call buyers are flocking to ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) and Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA)

by Alex Eppstein

Published on May 29, 2015 at 2:17 PM
Updated on Jul 6, 2020 at 11:33 AM

Biotech stocks have been red hot lately, and today is no exception. Two names within that sector seeing sizable upside this afternoon -- and attracting attention from option bulls -- are ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) and Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA).

ACAD is up 3.3% at $41.50 -- after taking a bounce off its 10-day moving average -- and now sports a year-to-date lead to 31%. Meanwhile, the security's calls are flying off the shelves at triple the expected intraday rate and 22 times the pace of puts. Digging deeper, traders are buying to open ACAD's in-the-money July 40 call, anticipating additional upside through the close on Friday, July 17, when back-month options expire.

Today's bullish bias is business as usual for the drugmaker. During the last 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), more than eight ACAD calls have been bought to open for every put. The resultant call/put volume ratio of 8.43 ranks in the top one-third of comparable readings from the last year.

Shifting our focus to ARIA, the shares are up 2.1% at $9.19, and currently sport a year-to-date advance of almost 34%. Calls are being exchanged at triple the normal intraday clip, powered largely by activity at the July 10 strike. By buying to open these out-of-the-money calls, traders expect ARIA to muscle into double-digit territory -- for the first time since October 2013 -- by back-month expiration.

Unlike ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) has seen puts bought to open at a faster-than-usual rate recently. The latter's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.19 checks in higher than 77% of comparable readings from the previous year.

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