Opko Health Inc. (OPK) Call Options Pop as Stock Stumbles

Opko Health Inc. (NASDAQ:OPK) has already given back its post-earnings gains

Aug 10, 2016 at 3:17 PM
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It's beginning to look as though there is nothing healthcare firm Opko Health Inc. (NASDAQ:OPK) can do to impress traders. The company reported a surprise quarterly profit Monday evening, but despite a strong start Tuesday, the shares had given back nearly all their gains by the close. And today, following a report that Opko's chairman purchased 10,000 shares for roughly $102,000 -- and amid rumors that the company may be working on a Zika vaccine -- the shares are lower yet again, last seen off 1.8% at $9.96. While the stock's price action may be less than impressive, activity in the options pits is seeing a bump.

Jumping right in, OPK calls are trading at 1.6 times their typical intraday rate, with the bulk of the action occurring at the weekly 8/12 10-strike call. It appears at least some new positions are being bought in the hopes OPK will break out above the $10 level by the close on Friday, when the weekly series expires.

Looking more broadly, options volume on OPK tends to be relatively light on an absolute basis, but recent traders have been heavily favoring calls over puts. Over the last 10 days, in fact, the weekly 8/12 10.50-strike call and the August 10 call saw the largest rises in open interest. Similarly, more than 10 calls have been bought to open for each put over the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) -- a ratio ranked near the top quartile of its annual range. But, as we've noted previously, elevated short interest on the stock suggests that not all of these call buyers are true bulls.

Near-term options buyers are currently getting a great deal on OPK at the moment. Due to the stock's post-earnings volatility crush, near-term premium is pricing in historically low volatility expectations, per the equity's Schaeffer's Volatility Index (SVI) of 32% -- an annual low. OPK's 30-day at-the-money implied volatility also hit a 52-week low earlier today, and was last spotted in the 1st percentile of its annual range, at 34.4%.

Technically, Opko Health Inc. (NASDAQ:OPK) hasn't been much to write home about. Today's slip has the stock back in the red on a year-to-date basis, and back below its 80-day moving average, which served as resistance throughout July. In fact, the shares haven't made any significant moves on the charts since late June.

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