Options Fly as Pricing Concerns Crush Endo International plc (ENDP)

Endo International plc (ENDP) is having yet another brutal day, following distressing comments from CEO Paul Campanelli

by Alex Eppstein

Published on Nov 8, 2016 at 1:45 PM

Like this fellow biotech stock, Endo International plc - Ordinary Shares (NASDAQ:ENDP) is tanking after its earnings report. The shares were last seen 7.5% lower at $14.50 and on the short-sale restricted list, even though the company's earnings report topped expectations. Likely pressuring the stock are comments from CEO Paul Campanelli, who said the firm expects increasing pricing and competitive pressures in its U.S. generics business through 2017. As ENDP struggles, options traders have piled on.

Right now, the stock's calls are crossing the tape at double the usual intraday rate. By the numbers, about 4,300 calls have changed hands, easily outstripping the 1,100 puts exchanged so far. The most active strike is the November 16 call, where it looks like traders are closing out long -- and, likely, losing -- positions.

In recent months, traders have been buying to open a lot of ENDP calls. Looking back 50 days, the stock has racked up a call/put volume ratio of 6.11 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). What's more, this ratio ranks just 11 percentage points from a 12-month high. On top of that, Endo's Schaeffer's put/call open interest ratio (SOIR) of 0.33 is approaching the call-skewed bottom quartile of its annual range.

It looks like short-term options buyers may be paying a pretty penny for their bets, too. ENDP's Schaeffer's Volatility Index (SVI) rests at an annual peak of 140%, suggesting the options market is pricing in extreme near-term volatility expectations.

In terms of technicals, things haven't been pretty for Endo International plc - Ordinary Shares (NASDAQ:ENDP), even before today. The biotech stock has surrendered about three-quarters of its value on a year-to-date basis.

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