Sizzling Sarepta Therapeutics Inc (SRPT) Targeted by Option Bulls

Sarepta Therapeutics Inc (SRPT) has more than doubled in value this week

by Alex Eppstein

Published on Sep 22, 2016 at 3:02 PM
Updated on Jun 24, 2020 at 10:16 AM

Sarepta Therapeutics Inc (NASDAQ:SRPT) is sizzling once again, in what's been a banner week for the biotech stock. Right now, the shares are 6.2% higher at $59.67 following last night's announcement of a $225 million stock offering, bringing their week-to-date advance to 112%. What's more, short-term traders are piling into SRPT's options pits.

Looking at the 10 most active options, six belong to the already popular weekly 9/23 series. In the lead is the weekly 9/23 60-strike call, where buy-to-open activity is likely taking place. The goal for buyers is for SRPT to extend its lead back above the round $60 level, and potentially into new multi-year-high territory, by expiration tomorrow night. Earlier, in fact, the biotech stock touched a 14-year peak of $61.60.

While call buyers are on the prowl, options traders have recently been betting on -- or protecting their long stock positions against -- losses, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). SRPT's 10-day put/call volume ratio of 1.15 outstrips nearly four-fifths of all readings from the prior year, hinting at a pronounced bearish bias.

Given the biotech's colossal gains in recent sessions, it wouldn't be surprising for options traders to expect some short-term speed bumps. After all, SRPT's 14-day Relative Strength Index (RSI) has swelled to nearly 85, well into overbought territory.

At the same time, however, there's still plenty of cash on Sarepta Therapeutics Inc's (NASDAQ:SRPT) sideline. One-third of the stock's float is sold short, representing over eight sessions' worth of pent-up buying power, at the equity's typical trading levels.

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