Bulls Bet On a Radius Health Inc (RDUS) Rebound

Radius Health Inc (RDUS) is taking it on the chin today, but option traders are keeping the faith

by Alex Eppstein

Published on Oct 8, 2015 at 2:52 PM
Updated on Jun 24, 2020 at 10:16 AM

Radius Health Inc (NASDAQ:RDUS) is tanking along with other healthcare stocks, even as the Dow eyes a fifth straight win. At last check, the shares are down 7.8% at $61.51, cutting into their year-to-date lead -- which remains at a lofty 58%. Meanwhile, with RDUS on the short-sale restricted list, activity in its options pits is ramping up.

Taking a quick step back, calls have been the equity's options of choice for some time. During the past 20 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 17 calls for every put.

Today, RDUS calls are changing hands at eight times the usual intraday rate. What's more, the most popular option -- the January 2016 65-strike call -- appears to be seeing some buy-to-open activity. In other words, these traders anticipate the stock will muscle back atop $65 by January 2016 expiration.

Brokerages echo this optimism. Of the six analysts tracking RDUS, five have doled out "strong buy" recommendations, with the sole outlier sporting a "hold." On the other hand, short sellers have been increasing their bearish exposure. Nearly 12% of Radius Health Inc's (NASDAQ:RDUS) float is sold short, representing eight days of trading activity, at the stock's average daily trading volume.

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