Ocular Therapeutix Inc (OCUL) Options Volume Pops on FDA Diss

The FDA did not approve Ocular Therapeutix Inc's (NASDAQ:OCUL) eye pain treatment

Jul 25, 2016 at 11:18 AM
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The Food and Drug Administration (FDA) has rejected approval of Ocular Therapeutix Inc's (NASDAQ:OCUL) post-operative eye pain treatment, Dextenza, citing concerns over the biotech's manufacturing process. While OCUL stock plunged 10% out of the gate -- putting it on the short-sale restricted list -- it was last seen down 5% at $4.91. Meanwhile, in OCUL's typically lightly traded options pits, call volume has soared to 11 times what's typically seen, in the 100th percentile of its annual range.

Drilling down, it looks like some speculators could be selling to close their positions at OCUL's August 5 and 7.50 calls. Heading into today's trading, these out-of-the-money (OOTM) strikes were home to peak call open interest in the front-month series. However, the September 10 call is OCUL's top open interest position, with 815 contracts currently in residence.

Widening the sentiment scope reveals a recent preference for calls over puts among speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Over the past 10 sessions, specifically, options traders have bought to open 32 calls for each put.

However, their could be an ulterior motive to this call-heavy backdrop. Specifically, with a healthy 10.9% of OCUL's float sold short, some of these short sellers could be purchasing OOTM calls to hedge their bearish bets against any upside risk.

Technically, though, it looks like short sellers have been on the winning side for some time. Year-over-year, shares of Ocular Therapeutix Inc (NASDAQ:OCUL) have shed almost 81%. Plus, the stock earlier hit an intraday low of $4.65 -- just two pennies shy of matching its June 27 record low of $4.63.

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