PTC Therapeutics, Inc. (PTCT) Options Sizzle Amid FDA-Induced Lows

PTC Therapeutics, Inc. (PTCT) is fresh off record lows due to a rejection by the FDA

Feb 23, 2016 at 2:58 PM
facebook X logo linkedin

It's been a brutal day for PTC Therapeutics, Inc. (NASDAQ:PTCT). The shares are down over 58.3% at $11.79, after the U.S. Food and Drug Administration (FDA) said the drugmaker's application for muscle disorder treatment translarna does not merit a review. In fact, the stock is the worst-performing Nasdaq component this afternoon, on a percentage basis. At the same time, options volume has exploded on PTCT.

Diving right in, nearly 6,700 options have traded on the pharmaceutical stock -- 16 times what's normally seen at this point in the day. Among the most active strikes are the March 12.50 and 15 puts, and traders may be buying to open these options in the hopes that PTCT will continue to fall through front-month expiration, at the close on Friday, March 18.

This represents a break from the norm. During the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 84.20 PTCT calls for every put -- a ratio that outstrips all but 2% of comparable readings from the last 12 months. Likewise, the stock's Schaeffer's put/call open interest ratio (SOIR) rests at an annual low of 0.47, with calls more than doubling puts among options with a shelf-life of three months or less.

Elsewhere, PTCT has been a popular target among short sellers -- though it's currently short-sale restricted. During the latest reporting period, short interest popped close to 19%, and now represents one-third of the stock's total float. At PTCT's usual trading volumes, it would take two weeks to cover these bearish bets. Given these high short interest levels, it's possible some of the aforementioned call buying was at the hands of short sellers seeking a hedge.

Underscoring that theory is PTCT's woeful performance on the charts. Earlier, the stock hit a record low of $11.56, and year-over-year, it's plunged roughly 84%. More bad news could be on the way, too, as a number of law firms announced investigations into PTC Therapeutics, Inc. (NASDAQ:PTC) amid allegations of fraud.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI