Option Bears Continue to Target Sarepta Therapeutics Inc (SRPT)

Option bears and short sellers anticipate more downside for Sarepta Therapeutics Inc (SRPT)

Mar 9, 2016 at 11:31 AM
facebook X logo linkedin

Biotech stock Sarepta Therapeutics Inc (NASDAQ:SRPT) has shed 4.2% to trade at $13.83 today, on news that the company is consolidating some of its facilities and laying off about 17% of its workforce. These moves come as the U.S. Food and Drug Administration (FDA) has yet to set a date for its delayed review of SRPT's muscle wasting disorder drug, leading bearish traders to pile on the stock as a big rebound looks less and less likely.

In early February, option traders were hopeful, picking up calls at an extreme pace in hopes of a SRPT bounce. But now the bears are back in control. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio arrives in the lofty 83rd percentile of its annual range.

As a result, total put open interest on SRPT now stands at a 52-week high of 45,112 contracts. And put volume on the biotech stock is heavier than usual today, too. SRPT puts are crossing the tape at 1.3 times their typical intraday pace -- though for lightly traded SRPT, that amounts to only about 1,400 contracts so far.

Option traders aren't the only ones expecting more downside for the shares, either. Short interest on SRPT climbed 27% during the two most recent reporting periods, and now accounts for nearly 32% of the equity's total available float. At SRPT's average daily volume, it would take nearly 10 sessions to cover all these bearish positions.

SRPT could be in more pain should analysts downwardly revise their ratings, as well. The stock currently boasts six "buy" or better ratings and six "holds," without a single "sell" on the books. And the average 12-month price target of $29 is more than double the security's current value. Future downgrades or price-target cuts could have Sarepta Therapeutics Inc (NASDAQ:SRPT) falling back toward its early February multi-year low of $10.20 sooner rather than later.

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 C3.ai calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI