Aerie Pharmaceuticals Inc (AERI) Options Fly On Drug News

Aerie Pharmaceuticals Inc (NASDAQ:AERI) options flew off the shelves after the company submitted an NDA to the FDA for Rhopressa

Sep 7, 2016 at 4:59 PM
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It looks like today was a good day for biotechs, and Aerie Pharmaceuticals Inc (NASDAQ:AERI) didn't stand idly by on the sidelines. The drugmaker last night announced its submission of a New Drug Application (NDA) to the Food and Drug Administration (FDA) for Rhopressa, an eye drop that relieves pressure related to ocular hypertension and glaucoma. As such, AERI ended the day 3.9% higher at $20.33, and the stock's options flew off the shelves.

Option volume finished the day in the 99th percentile of its annual range, with options running at nine times their usual intraday pace. In particular, puts crossed the line at 13 times their usual clip, although in terms of absolute numbers, calls led puts 3,155 to 2,126.

Today's most active put option was the September 15 put, where it looks like possible sell-to-open action occurred, as traders bet on a floor at $15. This marks a change of pace for the options crowd, which has been buying to open AERI puts at an accelerated clip. AERI's 50-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) of 0.65 sits higher than 78% of all other readings from the past 12 months, indicating a larger-than-usual bearish bias towards the stock.

Likewise, while short interest in AERI is down by nearly 21% over the last two reporting periods, shorted shares still account for a hefty 27.8% of AERI's float. It would take traders more than two weeks to cover these bearish bets, at AERI's average daily volume.

Aerie Pharmaceuticals Inc (NASDAQ:AERI) has roughly doubled since its March low of $10.82. However, the overhead $21.50-$22 level represents a 61.8% Fibonacci retracement of its November 2015 high to its March low, and the shares could encounter a roadblock at this level. Likewise, the September 22.50 strike is home to peak front-month call open interest, which could translate into an options-related speed bump in the short term. However, a mass exodus of option bears or an unwinding of short positions could help AERI battle its way through congestion.

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