Lipocine Inc (LPCN) Bull Gap Sets Options Pits Ablaze

Lipocine Inc (LPCN) options are trading at 154 times the usual intraday pace

Oct 7, 2016 at 12:03 PM
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Biotech Lipocine Inc (NASDAQ:LPCN) is putting on a proverbial clinic today, boosted by some upbeat analyst attention. Amid a gargantuan rally for the stock, its options are being exchanged at a rapid-fire rate.

Diving right in, the major catalyst for LPCN shares is a bullish initiation at H.C. Wainwright. The brokerage firm started coverage with a "buy" rating and a $25 price target. "Our investment thesis hinges on the success of 3 late-stage orally formulated steroid products to better compete with current products that are either injectable or topical," H.C. Wainwright explained in a note.

Thanks to the vote of confidence, LPCN has surged 30.2% to trade at $5.43, making it one of the top stocks on the Nasdaq. In fact, the shares are perched at levels not explored since before their late-June bear gap -- though they're still down 58% on a year-to-date basis.

As alluded to, LPCN options volume has gone wild, with calls running at 154 times the expected intraday clip. Of course, the stock's options are very lightly traded, typically speaking, with an average daily volume of just 25 contracts. At last check, more than 1,200 calls are on the tape.

Likely contributing to Lipocine Inc's (NASDAQ:LPCN) upside gap is short-covering activity. Roughly 15% of the biotech stock's float is sold short, which -- at its average daily volumes -- would take nearly four weeks to buy back.

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