How This Sarepta Therapeutics Options Buyer Scored Big

SRPT stock hit a record high earlier

Jun 19, 2018 at 2:31 PM
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Options volume has exploded on Sarepta Therapeutics Inc (NASDAQ:SRPT) today, pacing in the 99th annual percentile. With SRPT stock surging on the back of upbeat data for its Duchenne muscular dystrophy (DMD) treatments, some of the action is a result of speculators liquidating positions -- with one trader in particular closing out a big winner.

At last check, SRPT shares were trading up 36.6% at $143.73, earlier hitting a record high of $176.50, after the company's DMD gene therapy lowered serum creatine kinase (CK) by 87% in the three enrolled patients. In the options pits, 20,135 calls and 11,281 puts are on the tape -- nearly 11 times what's typically seen at this point in the day.

Most active is the weekly 6/22 150-strike call, where it looks like one trader may be cashing out of their deep in-the-money weekly 6/22 105-strike calls and using the profits to bet on more upside for the drug stock through week's end. Whatever the reason, Trade-Alert notes a number of those lower-strike calls were bought to open last Friday for a volume-weighted average price (VWAP) of $7.10. Today, the VWAP on these calls was last seen at $51.92, meaning the call buyer is staring at a 631% profit.

Looking at the charts, SRPT stock had been barreling higher over the last 12 months -- adding 212% year-over-year through last night's close. And today's surge could shake some of the remaining shorts loose, which might create even bigger tailwinds for the security. Although short interest fell 12.7% in the most recent reporting period, these bearish bets still account for almost 17% of Sarepta Therapeutics' available float, or 8.7 times the average daily pace of trading.

srpt stock daily chart june 19

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