Catalent Inc Options Accelerate as Blackstone Cuts Stake

Blackstone Group LP (BX) slashed its stake in Catalent Inc (CTLT)

Jun 7, 2016 at 3:30 PM
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Following in the bearish footsteps of this high-profile sector peer, drugmaker Catalent Inc (NYSE:CTLT) is getting demolished. At last check, the pharmaceutical stock has dropped 8.4% at $24.01, after the company announced a secondary public offering Monday evening, and Blackstone Group LP (NYSE:BX) slashed its stake by 8.8 million shares. Amid these developments, CTLT put options have kicked into overdrive.

While just 1,018 put options have crossed the tape, this nearly quadruples the usual intraday pace -- and almost triples the number of calls traded. The 25 strike is popular on both sides of the aisle, with some sell-to-close activity detected at the June 25 put -- confirmed by the International Securities Exchange (ISE) -- and buy-to-open action at the June 25 call. While the put sellers may be locking in paper profits amid CTLT's sharp drop, the call buyers appear to be anticipating a bounce by next Friday's close, when the front-month series expires.

Generally speaking, short-term options traders are tilted in the direction of puts over calls. While the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.59 is call-heavy on an absolute basis, it ranks in the put-skewed 97th annual percentile. Looking specifically at near-the-money options in the June series, CTLT's front-month gamma-weighed SOIR is 1.50, with puts outweighing calls by a 3-to-2 margin.

On the charts, Catalent Inc (NYSE:CTLT) had been trying to fight back from its May lows in the $24 area. While it saw some success -- running as high as $29.57 by late May -- all of those gains have more or less evaporated with today's downside gap.

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