Drug Approval Drives Aralez Pharmaceuticals Inc (ARLZ) Options Demand

Aralez Pharmaceuticals Inc (ARLZ) put options are trading at 16 times the usual intraday pace

Sep 15, 2016 at 2:05 PM
facebook X logo linkedin


A day after plunging 11% and landing on the short-sale restricted list, Aralez Pharmaceuticals Inc (NASDAQ:ARLZ) has bounced -- sending stock and options volume to their loftiest levels in the past year. Specifically, the shares have jumped 5.3% to trade at $5.75, after the U.S. Food and Drug Administration (FDA) gave the green light to Yosprala, Aralez's heart attack prevention pill.

Put options, in particular, are in high demand. About 9,000 contracts are on the tape so far --16 times the expected intraday rate. ARLZ's most active strike is the in-the-money September 6 put, where it appears buy-to-open activity may be transpiring. If this is the case, the buyers anticipate the drug stock will reverse lower by tomorrow's close, when the put expires.

In recent weeks, though, speculators have been more interested in calls than puts. By the numbers, 4,859 ARLZ calls have been bought to open during the last 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), more than doubling the 2,133 puts purchased.

Underscoring this bias toward calls is the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.53. Stated simply, ARLZ calls nearly double puts among options slated to expire in the next three months.

That's not to say every call buyer is a bull. Given that short interest ballooned 26.7% in the most recent reporting period -- and accounts for a hefty 7% of Aralez Pharmaceuticals Inc's (NASDAQ:ARLZ) float -- it's entirely possible short sellers have been hedging their bearish positions with calls. This is all the more likely, given the stock's steep 42% year-over-year loss.

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.

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI