Puts Popular as Vertex Pharmaceuticals Extends Pullback

VRTX put volume has reached an annual high today

by Patrick Martin

Published on Oct 18, 2018 at 3:06 PM

Proteostasis Therapeutics (PTI) scored a big win after reporting positive data for its cystic fibrosis drug in an early stage study. In response, sector peer Vertex Pharmaceuticals, Inc. (NASDAQ:VRTX) is lower today, down 3.5% to trade at $179.02, at last check. Options traders are hitting overdrive on Vertex today, with puts in focus.

Diving right in, nearly 3,200 puts have been traded -- seven times what's typically seen at this point in the day, with volume already at an annual high. Much of the action has centered at the April 155 put, where Trade-Alert indicates new positions being opened. Also popular is the January 2019 series, where data suggests a possible three-way spread involving the 130- and 165-strike puts and the 200-strike call.

More broadly, there's been a heavier-than-usual bearish bias among options traders within the past two weeks. Amid light absolute volume, VRTX's 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 2.13, and ranks in the 100th annual percentile, showing an extreme interest in put buying relative to call buying. 

Looking at the charts, Vertex stock raced to a record high of $194.92 on Oct. 1. Overall, the equity has added 17% in 2018, although the shares are still headed toward their third straight weekly loss. The stock is now trading near its 100-day moving average, though, which emerged as support earlier this month.

Daily Stock Chart VRTX


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