Call Traders Blitz Medivation Inc (MDVN) After Sanofi Swipe

Medivation Inc's (NASDAQ:MDVN) board of directors unanimously rejected a $9.3 billion cash bid from Sanofi SA (ADR) (NYSE:SNY)

Apr 29, 2016 at 3:06 PM
facebook X logo linkedin

Following rumors that began circling earlier this month, Medivation Inc (NASDAQ:MDVN) has confirmed its board of directors unanimously rejected a hostile takeover attempt from French firm Sanofi SA (ADR) (NYSE:SNY), saying the $9.3 billion cash bid "substantially undervalues Medivation." SNY, meanwhile, said it is "committed to" combining the two companies, and plans to appeal directly to MDVN shareholders. Against this backdrop, MDVN stock is up 1.9% at $57.21, and call volume is docked in the 99th annual percentile.

By the numbers, 12,652 MDVN calls are on the tape -- three times what's typically seen at this point in the day, and nearly two times the number of puts that have traded. Most active is the equity's weekly 5/6 57.50-strike call, where the International Securities Exchange (ISE) confirms some new positions are being purchased.

By buying to open the near-the-money calls, traders expect MDVN stock to extend today's rally through next Friday's close, when the weekly series expires. This time frame includes the firm's first-quarter earnings report, which is set for release after next Thursday's close.

More broadly speaking, it's been put buyers who have been busy in MDVN's options pits in recent weeks. At the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day put/call volume ratio of 0.74 sits just 10 percentage points from a 52-week peak.

Along similar lines, MDVN's Schaeffer's put/call open interest ratio (SOIR) of 0.91 rests in the 85th percentile of its annual range. In other words, short-term speculators are more put-heavy than usual toward the equity.

This skepticism isn't shared outside of the options pits, though. Short interest, for example, plunged 17.8% in the most recent reporting period to 3.52 million shares -- the lowest amount since January 2007. Meanwhile, 11 out of 15 analysts maintain a "strong buy" rating on MDVN, without a single "sell" to be found.

Technically, MDVN more than doubled since hitting a two-year low of $26.41 on Feb. 9. What's more, the shares of Medivation Inc (NASDAQ:MDVN) are set to notch their first monthly close north of their 20-month moving average since last July.

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