Option Bulls Keep the Faith in Flagging Edwards Lifesciences Corp (EW)

Edwards Lifesciences Corp (EW) call options are hot, even though the stock is plunging after earnings

Oct 26, 2016 at 11:42 AM
facebook X logo linkedin


Edwards Lifesciences Corp (NYSE:EW) is getting demolished on lackluster quarterly sales -- though earnings were in line with expectations. At last check, the healthcare stock has sunk 12.8% to $99.14, landing it on the short-sale restricted list. Meanwhile, intraday stock and options volume are running in the 100th percentile of their respective annual ranges, with 9.1 million EW shares and 9,835 options traded.

From the looks of it, some options traders are betting on a short-term bounce for EW. Specifically, calls are being exchanged at 22 times the expected rate for this point in the session, with 7,084 contracts on the tape. The most active strike is the November 100 call, with traders purchasing new positions in hopes the stock will muscle back into triple-digit territory by front-month expiration, at the close on Friday, Nov. 18.

This optimism reflects a trend witnessed in recent months at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, during the past 50 sessions, traders have bought to open four times as many EW calls as puts. The resultant call/put volume ratio of 4.09 ranks in the bullishly skewed 92nd annual percentile.

Short-term options can be purchased at a relative discount right now, too. Specifically, EW's Schaeffer's Volatility Index (SVI) of 36% registers below 98% of all comparable readings from the past year, hinting at historically muted volatility expectations.

Meanwhile, optimism can be detected elsewhere on the Street. EW has received 13 "buy" or better recommendations from analysts, compared to four "holds" and not a single "sell" opinion. Likewise, the stock's consensus 12-month price target of $122.75 stands in record-high territory.

From the looks of it, though, the brokerage crowd may be starting to change its collective tune on Edwards Lifesciences Corp (NYSE:EW). Responding to last night's earnings report, no fewer than six analysts slashed their price targets on the shares. The deepest cut came courtesy of Citigroup, which reduced its target to $88 from $94, an area last explored prior to an early April bull gap.

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.

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI