Aerie Pharmaceuticals Inc (AERI) Options Traders React to Fresh Highs

Aerie Pharmaceuticals Inc (NASDAQ:AERI) is fresh off an annual peak, after a successful share offering

Sep 16, 2016 at 2:14 PM
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It's been a banner week for Aerie Pharmaceuticals Inc (NASDAQ:AERI), which soared nearly 45% yesterday on solid data for the company's eye drug, Roclatan. Plus, AERI stock is up an additional 10.4% today to trade at $33.80 -- fresh off an annual high of $35.25 -- after the biotech said it raised more equity than expected in its public share offering. Options traders are rushing toward the soaring stock, too, with total volume running at five times what's typically seen at this point in the day.

By the numbers, 9,071 AERI options have changed hands so far -- compared to an average daily volume of 2,407. Calls have the edge over puts, with 5,775 of the former and 3,296 of the latter on the tape. Most active is the equity's September 35 call, and it looks like new positions are being purchased, as traders eye extended gains through tonight's close -- when the front-month series expires.

More broadly speaking, while call buyers have had the upper hand on an absolute basis in recent months, put buying has been picking up steam. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for instance, AERI's 50-day put/call volume ratio has risen to 0.71 from 0.25 since the start of the month. Plus, the current ratio ranks higher than 81% of all comparable readings taken in the past year.

Meanwhile, AERI's Schaeffer's put/call open interest ratio (SOIR) of 0.65 arrives in the 87th percentile of its annual range. In other words, speculative players are more put-heavy than usual toward options expiring in three months or less. What's more, total put open interest of 13,754 contracts for AERI is docked at an annual high.

Now may be a good time for options buyers to strike on Aerie Pharmaceuticals Inc's (NASDAQ:AERI) near-term contracts, too, considering volatility expectations have dropped dramatically in the wake of Thursday's drug data. In fact, after topping out at a 52-week high earlier this week, AERI stock's 30-day at-the-money implied volatility was last seen down 1.2% at 68.6% -- in the low 14th annual percentile.

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