Mylan Call Options Active After Bullish Brokerage Note

MYL calls are trading at six times the average intraday clip

Managing Editor
Mar 6, 2018 at 2:29 PM
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Mylan N.V. (NASDAQ:MYL) stock is soaring today, up 4.8% to trade at $43.52, after Morgan Stanley upgraded the healthcare name to "overweight" from "equal weight," and issued a price-target hike to $50 from $39. The analyst in coverage views Mylan as the best-positioned U.S. generics company due to solid biotech partnerships and a strong pipeline of new products. 

The news puts Mylan shares on track for their best single-day performance since Jan. 11, and above their 40-day moving average for the first time since Jan. 30. After snagging an annual high of $47.82 on Jan. 23, MYL stock pulled back with the broader stock market in February, but ultimately found support atop its 120-day moving average.

In the options pits, traders have been more bullish than normal lately. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows MYL with a 50-day call/put volume ratio of 2.38, ranking in the 96th percentile of its annual range. This indicates calls have been bought to open over puts at a much faster-than-usual clip in the past 10 weeks.

Shifting gears to today, over 29,000 calls have traded so far -- six times what's typically seen at this point, with volume pacing in the 99th annual percentile. Leading the pack is the April 50 call, which has seen several large blocks totaling more than 15,000 contracts change hands. In addition, it looks like some speculators may be buying to open the March and April 45 calls, banking on a surge north of $45 in the near term.  

The good news for premium buyers is that MYL's Schaeffer's Volatility Index (SVI) of 30% ranks in the 17th annual percentile. In other words, as of yesterday, relatively low volatility expectations were being priced into short-term contracts. 


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