Options Traders Bet On ACADIA Pharma Breaking Lower

ACADIA Pharmaceuticals Inc. (ACAD) put options are trading at an accelerated clip

Sep 30, 2016 at 12:59 PM
facebook twitter linkedin

ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is struggling this afternoon, among the biotechs sitting out the broader rally. The drug stock was last seen 1.6% lower at $32.19, while its put options have caught fire.

Diving right in, ACAD puts are trading at triple the usual intraday rate, and on pace for the 93rd percentile of their annual range. According to Trade-Alert, speculators may be purchasing fresh out-of-the-money positions at the October 29 put. In other words, these near-term bettors foresee the stock tumbling south of $29 by the close on Friday, Oct. 21, when front-month options expire. Worth noting is the fact that ACAD hasn't settled a week below that strike since early May.

This penchant for put buying merely reflects what's been observed in recent weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, ACAD's 10-day put/call volume ratio of 0.40 ranks in the bearishly skewed 77th percentile of its annual range. Also put-focused, relatively speaking, is the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.66, which is docked in the top quartile of all readings taken in the past year. In other words, near-term traders are more put-biased than usual.

Elsewhere, short sellers have been pouncing on ACAD. Despite stepping back from record levels in May, short interest still accounts for more than one-fifth of the biotech stock's float. Plus, at ACAD's average daily trading volume, it would take over two weeks to cover these bearish bets.

This skepticism is understandable, given the shares' recent string of lower lows, dating back to June. While the stock has found support near the round $30 area -- corresponding with its 200-day moving average -- it appears that a bearish descending triangle pattern may be forming. In other words, if ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) breaks south of its current foothold, a move to $29 or lower wouldn't be surprising.

acad daily september 30

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.


Now is the time to join our thriving community of Event Traders who consistently profit from every earnings season. With this discounted subscription opportunity, you'll stay ahead of the curve and seize opportunities others miss. Do not let Q3 earnings season pass you by – subscribe now and supercharge your portfolio with expert insights that turn market reactions into profit-generating opportunities!! Don't waste another second... join us right now before the next trade targeting +200% is released!