Options Volume Pops on MiMedx Stock After Short Seller Report, SEC Subpoena

MDXG shares have dropped 29% in the last month

Sep 21, 2017 at 1:59 PM
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When we checked in on regenerative tissue specialist MiMedx Group Inc (NASDAQ:MDXG) last month, it looked like the sky was the limit, with the shares sporting a year-over-year gain of 130% and trading near $17. Things are drastically different this time around, however, with MDXG stock last seen trading near $12.39. The sell-off comes after Viceroy Research released yesterday a short seller report saying the company was "uninvestable," after finding signs of channel stuffing and some concerning hiring tendencies. Then this morning, the company revealed a Securities Exchange Commission (SEC) subpoena. 

In the meantime, options volume is surging, currently pacing for a 52-week high. Calls and puts are both trading well above the expected pace for today. The most popular contract overall is the March 10 call, where 3,356 contracts have traded. Data isn't clear here, but those buying to open positions would be hoping for MiMedx shares to rise further above the $10 mark. 

Also seeing heavy volume is the October 15 put, where 2,000 contracts have traded. It's likely buy-to-open activity has taken place here, suggesting traders are betting on extended losses below the $15 mark before the contracts expire on Friday, Oct. 20. 

Put buyers have indeed been active in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), more than 4,800 puts have been bought to open during the past 10 days, compared to fewer than 700 calls. 

And of course, it's not surprising to note that short interest has been rising on MiMedx. In the last two reporting periods alone, short interest jumped 10%. These bearish bets now represent almost 24% of the stock's float, or 11.4 times its average daily volume. 

The equity traded as low as $11.10 earlier, breached its 200-day moving average for the first time since March and earned a spot on the short-sale restricted list in the process, but has recovered most of these losses at last check. Even with the shares' sharp retreat in recent weeks - dropping 28.6% over the past month -- MDXG still sports a year-to-date gain greater than 38%. 

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