ImmunoGen, Inc. (IMGN) Traders Put Their Hopes in an Extended Pullback

ImmunoGen, Inc. (NASDAQ:IMGN) is giving back some of its gains from yesterday

by Josh Selway

Published on Jun 2, 2015 at 12:10 PM
Updated on Jun 2, 2015 at 12:17 PM

ImmunoGen, Inc. (NASDAQ:IMGN) is off 11.2% today at $13.71, giving back some of yesterday's huge gains, and landing on the short-sale restricted list. Traders are betting on this slide to continue, too, with puts crossing at 17 times the expected intraday rate. Judging by the data, there may be some buy-to-open activity occurring at IMGN's June 15 put. With a volume-weighted average price (VWAP) of $1.36, breakeven for the options is $13.64 (strike less VWAP). In other words, traders hope to see the shares breach this level by front-month expiration, at the close on Friday, June 19. 

As noted yesterday, call buying has easily outstripped put buying in IMGN's options pits for some time now. However, relative to what's normally seen, put players have been active lately. According to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day put/call volume ratio of 0.44 is only 10 percentage points from an annual high. 

Reaffirming this relative put bias is the stock's Schaeffer's put/call open interest ratio (SOIR). At 0.66, this reading outranks 88% of all others from the past 12 months. In other words, IMGN's short-term speculators have targeted puts over calls at an accelerated rate. However, given the fact that the shares have more than doubled in value this year, these traders -- particularly, those buying to open puts -- may have been shareholders seeking protection against a move like the one we're seeing today. Given the stock's 14-day Relative Strength Index (RSI) of 89 -- which sits deep in overbought territory -- today's pullback may have been in the cards.

There's certainly pessimism outside the option pits, no matter how you look at it. Over 14% of ImmunoGen, Inc.'s (NASDAQ:IMGN) float is sold short, accounting for over eight trading days of activity, at its normal volumes. This skeptical outlook is shared by the brokerage bunch, as IMGN's average 12-month price target of $10.60 sits at a discount to current levels. 


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