Option Bears Aren't Buying the Myriad Genetics, Inc. (MYGN) Bounce

Despite a rare day in the sun, Myriad Genetics, Inc. (MYGN) options traders are betting on further losses

by Alex Eppstein

Published on Oct 17, 2016 at 2:41 PM

It's been a volatile past few days for Myriad Genetics, Inc. (NASDAQ:MYGN), and today is no different. The biotech stock is up 4.7% to trade at $19.51, ahead of tomorrow's start to the American Society of Human Genetics Annual Meeting in Vancouver -- where MYGN is expected to present data from four studies. As excitement for the conference ramps up, so too does action in the options pits.

At last check, roughly 3,400 puts were on the tape, or 33 times what's expected at this point in the session. What's more, puts are running in the 100th percentile of their annual range. In the lead by a mile is the November 15 strike, and Trade-Alert confirms buy-to-open activity. By scooping up these bearish bets, the options players foresee MYGN breaching $15 by back-month expiration, at the close on Friday, Nov. 18.

While the stock's options are generally traded lightly, calls have held the advantage. Take, for instance, MYGN's Schaeffer's put/call open interest ratio (SOIR) of 0.94, which ranks in the low 20th annual percentile. Long story short, open interest within the front three months is more call-tilted than usual, looking back at the last year.

However, there's hardly a bullish consensus around Myriad Genetics. Twelve of 14 analysts rate the stock a "hold" or worse. Not to mention, short interest has been soaring -- rising nearly 20% during the past two reporting periods. In total, 11.6 million shares -- or 29.5% of MYGN's float -- are sold short, which would take over two weeks to cover, at average trading levels.

There's a reason for the skepticism: Today's gains aside, Myriad Genetics, Inc. (NASDAQ:MYGN) has been stair-stepping its way lower for the better part of the last year. Over the previous 12 months, in fact, the shares have surrendered over half of their value, and touched a five-year low as recently as Oct. 13.

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