Options Volume Soars as Alexion Pharmaceuticals Sinks

ALXN stock volume hit a two-year peak today

May 23, 2017 at 3:40 PM
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Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) is trading down 9% at $104.97 -- fresh off a three-year low at $102.47 -- amid a busy session for the stock. Roughly 1.5 million ALXN shares have changed hands, the most in two years, after the drugmaker said its chief financial officer and the head of research and development are both leaving. A downgrade to "neutral" from "overweight" at J.P. Morgan Securities is adding more pressure, with the brokerage saying the executive shake-up "will not help waning confidence in ALXN shares." With the stock short-sale restricted, ALXN options traders are busy.

At last check, 21,379 calls and 19,138 puts have traded on ALXN, more than 20 times what's typically seen at this point in the day. Total options volume is on track to settle in the 99th annual percentile, but remains below the 52-week peak of 61,806 Alexion options traded in a single session, set on Jan. 5. Most active are the November 100 and 110 puts and 120 call, which appear to be involved in a three-way spread.

Shorter-term options traders look to be taking a more clear-cut bearish approach, purchasing new positions at ALXN's weekly 5/26 102-strike put. If this is indeed the case, the goal is for Alexion shares to be sitting south of $102 -- territory not charted since October 2013 -- by week's end, when the options expire.

This would echo the broader trend seen in ALXN's options pits, too. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 3.40 ranks 2 percentage points from a 52-week peak. In other words, options traders have bought to open puts relative to calls at a near-annual-high clip. 

The skepticism is seen outside of the options pits, as well, with short interest up 29% since mid-March. It seems this selling pressure has weighed on ALXN's stock price, too, with the shares down almost 23% from their March 6 high at $135.86. However, not a single one of the 18 analysts covering Alexion Pharmaceuticals maintain a "sell" rating. The stock could be due for bigger headwinds, should more bearish brokerage notes come down the pike.

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