Puts Pop Amid Drug Stock's Roller-Coaster Session

CORT stock tagged a new annual low before reversing higher

by Patrick Martin

Published on Feb 5, 2019 at 2:58 PM

Corcept Therapeutics Incorporated (NASDAQ:CORT) has had a roller-coaster day. The drugmaker started the day off touching new lows, after Blue Orca Capital disclosed its short position on the stock, echoing last week's scathing report from the Southern Investigative Reporting Foundation (SIRF). However, CORT pivoted higher by midday, and at last check was up 5.3% to trade at $10.74, after the company issued white paper disputing recent claims that "Korlym is dangerous and physicians only prescribe it because we pay them." The company called the allegations "offensive nonsense," and said they're the work of "speculators who seek to enrich themselves by driving down the price of our stock."

Despite reversing higher, put traders have been quite loud today in CORT's typically quiet options pits. So far, about 7,400 CORT put options have changed hands -- eight times the average intraday volume and pacing for an annual high. Most popular is the February 10 put, where it looks like new positions are being purchased for a volume-weighted average price (VWAP) of $1. If this is the case, breakeven for the put buyers at the Feb. 15 close is $9.00 (strike less premium paid). 

On the charts, CORT earlier tagged an annual low of $9.14. The equity has been in a channel of lower highs since peaking in early 2018, and after last week's SIRF report, CORT breached support near the $11.50 level.

It's no surprise, then, that analysts are quite bearish on the equity, with four out of five in coverage rating CORT a "hold" or "sell." However, the equity's consensus 12-month price target of $13.80 is a 26.3% premium to the stock's current perch, so price-target cuts could be forthcoming, if the shares fail to make a sustainable bounce.


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