Valeant Pharmaceuticals Intl Inc (VRX) Option Buyers Go Bargain Hunting

The options market is pricing in low volatility expectations for Valeant Pharmaceuticals Intl Inc (NYSE:VRX)

Jun 21, 2016 at 3:09 PM
facebook twitter linkedin

While Bill Ackman may be winning with Herbalife Ltd. (NYSE:HLF) today, the activist investor is taking another hit with Valeant Pharmaceuticals Intl Inc (NYSE:VRX). At last check, the biotech stock was down 3.6% at $21.69, and fresh off a nearly six-year low of $21.41. Nevertheless, one optimistic options traders is holding out hope that VRX stock rebounds over the next several weeks.

Amid a slower-than-average session in VRX's options pits, the stock's July 23 call has garnered notable attention. It seems safe to assume new positions are being purchased at this front-month strike, meaning call buyers are anticipating a rally north of $23 by the time the options expire at the close on Friday, July 15.

These optimistic expectations are nothing new for VRX options traders. And while there may be an ulterior motive to the recent rush of call buying, traders are nonetheless getting a relatively good deal on the stock's short-term calls.

For starters, VRX's Schaeffer's Volatility Index (SVI) of 71% ranks in the 32nd annual percentile, suggesting premium on the equity's near-term options is pricing in low volatility expectations at the moment. Plus, its Schaeffer's Volatility Scorecard (SVS) of 80 indicates the options market has historically underpriced Valeant Pharmaceuticals Intl Inc's (NYSE:VRX) ability to make big moves over the past 12 months.

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.


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners