Options Traders Bet on a Drop Ahead of Mylan NV (MYL) CEO Testimony

Mylan NV (MYL) is higher ahead of today's congressional testimony from the company's CEO, but options traders have been taking a bearish approach lately

Sep 21, 2016 at 10:55 AM
facebook X logo linkedin

Drugmaker Mylan NV (NASDAQ:MYL) is bracing for another day in the spotlight, with the shares dropping out of the gate, but quickly reversing course, last seen up 1.3% at $40.92. The company’s CEO, Heather Bresch, is due to testify in front of the House Oversight Committee today regarding EpiPen price increases -- for which MYL has been lambasted in recent months. The trouble has only gotten deeper so far this week, with Senate Republicans calling for a probe into the company's rebate system, and West Virginia opening an investigation into possible antitrust and Medicaid violations. Upon this backdrop, traders and analysts have largely been taking a bearish approach toward MYL.

In MYL's options pits, the action has been relatively slow in recent days. But speculators have been more put-heavy of late, per the stock's 10-day put/call volume ratio of 1.76 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Not only does this show long puts nearly doubling calls over the past two weeks, but it ranks higher than nearly two-thirds of all comparable readings in the past year.

Traders have been targeting quick losses, too. Over the last 10 sessions, MYL's weekly 9/23 40- and 41-strike puts have seen the largest rise in open interest, with a large majority of these positions bought to open. That means put buyers have been betting MYL shares will drop below the strike prices before the weekly options expire at the close this Friday.

Outside of the options pits, short sellers have been backing off, with these pessimistic positions falling by more than 25% over the last two reporting periods. But this short-covering is likely the result of bears collecting profits, and has done little to help the shares.

The brokerage bunch has been taking a tepid approach to MYL, as well. Two-thirds of analysts currently rate the stock merely a "hold," though none recommend selling the shares.

Technically, MYL has been struggling of late. The stock is down 24% year-to-date, and its most recent rally attempt stalled out just shy of the $42 level on Friday. In fact, the $40-$42 range has been crucial for Mylan NV in the past, providing both support and resistance, and limiting the stock's movements so far this month.

MYL Weekly Chart September 21

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