Options Soar on Cratering Corbus Pharmaceuticals Holdings Inc (CRBP)

Corbus Pharmaceuticals Holdings Inc (CRBP) is getting crushed today after one author predicted "a big fall" for the biotech stock

by Alex Eppstein

Published on Oct 25, 2016 at 10:39 AM
Updated on Jun 24, 2020 at 10:16 AM

Corbus Pharmaceuticals Holdings Inc (NASDAQ:CRBP) is cratering this morning, last seen 21.5% lower at $6.99 and on the short-sale restricted list. At the same time, options trading is heating up, especially on the call side of the aisle -- with the contracts running at eight times the expected intraday rate.

Weighing on the biotech stock is a bearish write-up at TheStreet.com, which predicts CRBP is "headed for a big fall." According to the author's "most reliable and skeptical healthcare investor," Corbus' sole drug, resunab, "doesn't work" -- comparing the scleroderma treatment to "a hunter trying to kill a rhinoceros with a BB gun."

Despite the stock's stumble, it has still more than quadrupled in value on a year-to-date basis. In fact, as recently as Oct. 10, CRBP shares soared to a record high of $10.78.

Perhaps this is why options traders have been so call-centered, both today and longer term. Over the past 20 sessions at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open nearly 7.5 Corbus calls for every put.

Then again, short interest on the stock rocketed over 280% in the most recent reporting period, and now accounts for 8.8% of its float. Therefore, it's possible some of the aforementioned call buyers -- especially those targeting out-of-the-money strikes -- are actually short sellers hedging against extended upside for the long-term outperformer.

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