Most Active Options Update: Gilead Sciences, Inc. and MannKind Corporation

Put players have been keeping a close eye on Gilead Sciences, Inc. (NASDAQ:GILD) and MannKind Corporation (NASDAQ:MNKD)

Jun 16, 2015 at 11:48 AM
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The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. Two names of notable interest are drugmakers Gilead Sciences, Inc. (NASDAQ:GILD) and MannKind Corporation (NASDAQ:MNKD), which have been attracting the attention of put players.

Most Active Options Update


Put buyers have been active in GILD's options pits in recent weeks, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, the stock's 10-day put/call volume ratio of 0.81 ranks in the 99th annual percentile. In other words, puts have been bought to open over calls with more rapidity just 1% of the time within the past year.

Mirroring this is GILD's Schaeffer's put/call open interest ratio (SOIR). Since May 19 -- the start of this expiration cycle -- the stock's SOIR has grown to 1.10 from 0.93. What's more, the current ratio sits 1 percentage point from a 52-week peak, suggesting short-term speculators have rarely been as put-heavy toward the equity as they are now.

In the front-month series of options -- which expires at this Friday's close -- peak put open interest can be found at the June 120 strike, where 40,535 contracts are currently in residence. The majority of these options at the ISE were bought to open over the past month, meaning traders expect GILD to settle south of $120 at week's end.

Technically speaking, Gilead Sciences, Inc. is presently perched south of the strike -- at $118.21 -- and has yet to topple the $120 mark. However, the stock came close when it topped out at a record peak of $119.70 last Thursday. Longer term, the shares are up more than 25% year-to-date, making it plausible that some of the recent put buying -- specifically at out-of-the-money strikes -- is a result of shareholders protecting paper profits.

The same could be said for sector peer MNKD, which has bounced nearly 74% since hitting an annual low of $3.46 on May 12. In spite of this -- and outside of a rare appearance by option bulls last week -- the stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.77 outstrips 86% of all similar readings taken in the past year.

Meanwhile, since May 19, MNKD's SOIR has surged to 1.02 from 0.70 -- and currently ranks above 94% of all comparable readings taken in the past year. Simply stated, short-term speculators have been more put-heavy toward the stock only 6% of the time during the past 52 weeks.

Drilling down on the front-month series, peak put open interest is easily found at the deep in-the-money June 10 strike, where more than 59,300 contracts are housed. However, a similar amount of open interest resides at the June 10 call, and if yesterday's action is any indication, this activity could be at the hands of a straddle player.

Looking elsewhere, option traders have been initiating long positions at the June 4 put over the past month, expecting MannKind Corporation to breach $4 by this Friday's close. At last check, the stock was lingering near $6.02, and hasn't seen the south side of $4 since mid-May.
 

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