FDA Nod Stokes Unusual Option Activity On Hansen Medical, Inc. (HNSN)

A rare wave of call volume has hit surging Hansen Medical, Inc. (NASDAQ:HNSN)

Feb 2, 2016 at 11:20 AM
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Medical device manufacturer Hansen Medical, Inc. (NASDAQ:HNSN) hasn't had much success on the charts, to say the least. The stock hit an annual high of $12.30 last February, and this past January it had fallen to a record low of $1.28. On Monday, however, the shares spiked 48.8%, nearly closing above their 100-day moving average for the first time since July. Fortunately for shareholders, this trendline will be almost certainly topped today.

Specifically, the shares have jumped 32.8% to $4.25, after the Food and Drug Administration (FDA) gave the okay for the company's Magellan Robotic Catheter eKit -- a device that aids physicians in procedures that utilize robotic control. As mentioned, this price action has the stock set to close well above its 100-day moving average. 

160202HNSN

In the meantime, the medical device stock's option traders are making a rare appearance. For perspective, only 334 calls had been bought to open at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) over the past 10 weeks. Today alone, over 1,915 calls have already changed hands -- 174 times the expected amount.

The most popular option is the March 5 call, and it's possible traders are buying to open some positions here. If this is the case, these traders are hoping to see HNSN topple the $5 level before the options expire at the close on Friday, March 18. The security hit an intraday high of $5.10 earlier.

Looking beyond today's action, a few speculators may have profited significantly from the stock's rare outburst. Specifically, HNSN's top two strikes by open position are the March and February 2.50 calls, and data from the major exchanges suggests that there was at least buy-to-open activity at both strikes coming into today. Since anyone who initiated long calls only needed a move above $2.50 to profit, they could be pretty happy with today's news. 

Yet, there's another angle to consider. Going by average daily volumes, the 1.1 million HNSN shares that are sold short would take nearly over 13 trading sessions to buy back. As such, it's possible that some of this call-buying activity on Hansen Medical, Inc. (NASDAQ:HNSN) was from bears hedging their positions

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