Drug News Drives Agios Pharmaceuticals Inc (AGIO) Options Demand

Agios Pharmaceuticals Inc (AGIO) put options are trading at 150 times the usual intraday clip

by Alex Eppstein

Published on Sep 7, 2016 at 12:38 PM
Updated on Jun 24, 2020 at 10:16 AM

Like this fellow biotech, Agios Pharmaceuticals Inc (NASDAQ:AGIO) is burning up the charts. The drug stock has jumped 21.2% at $45.23 -- making it one of the biggest gainers on the Nasdaq, and representing its best day in roughly one year -- after partner Celgene Corporation (NASDAQ:CELG) said it expects to submit a new drug application (NDA) for experimental cancer treatment enasidenib by year-end. Not surprisingly, AGIO shares and options are trading at an extreme rate.

At last check, over 3 million AGIO shares and 4,200 options have changed hands, putting both on track for annual highs. Looking more closely, put volume has absolutely skyrocketed, at more than 150 times the usual intraday rate.

However, not all of these puts are of the bearish sort. The most active strike is the out-of-the-money October 45 put, and based on International Securities Exchange (ISE) data, the vast majority of the contracts have been sold to open. In other words, options traders are betting against AGIO breaching $45 by back-month expiration, at the close on Friday, Oct. 21.

Today's preference for short-term puts over calls is business as usual. Agios sports a Schaeffer's put/call open interest ratio (SOIR) of 1.29, with puts outstripping calls among options in the front three-months' series. On top of that, this SOIR ranks just 3 percentage points from an annual peak, suggesting near-term put open interest is approaching extreme levels.

On the charts, though, today's upward gap represents a dramatic break from the norm. Agios Pharmaceuticals Inc (NASDAQ:AGIO) was getting absolutely destroyed heading into the session, down 43.5% from its most recent peak in early June. Right now, though, the shares have a chance to post their first close above their 100-day moving average since late June.

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