Analysts, Options Traders Swarm Sinking CLVS Stock

Puts are the options of choice on CLVS stock today

Apr 15, 2019 at 12:36 PM
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Clovis Oncology Inc (NASDAQ:CLVS) late Friday said it was discontinuing a mid-stage trial of its lead cancer drug, rucaparib, in bladder cancer patients following the recommendation of an independent committee. Although CLVS said it will continue current late-stage trials testing the drug as a treatment for ovarian and prostate cancers, the stock is down 12.1% at $20.63.

Analysts have been quick to chime in on CLVS stock, with no fewer than four brokerages cutting their price targets on the drug name. SunTrust Robinson set the lowest bar at $28, but maintained its "buy" rating, saying it expects revenues from ovarian and prostate treatments to help drive Clovis Oncology share price.

Options traders are active today, too, with roughly 5,500 puts and 1,500 calls on the tape so far -- about seven times what's typically seen at this point in the day -- and put volume pacing in the 100th annual percentile. Most active are the May 19 and 26 puts, possibly due to one speculator rolling their bearish bet down from the higher strike to the lower strike. If this is the case, they are targeting bigger losses for CLVS over the next month.

More broadly speaking, long calls have been more popular than puts across the major options exchanges. In the past 20 days, 5.01 calls have been bought to open for each put at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX).

Some of this activity could be the result of shorts hedging against any upside risk, considering more than one-quarter of CLVS' float is currently sold short. While these bearish bettors are likely cheering today's plunge, they are also sidelined, with Clovis Oncology on the short-sale restricted list.

Coming into today's trading, Clovis Oncology stock had already been trending lower since being rejected by its 200-day moving average back in early March. Today's bear gap has CLVS shares breaking below their 120-day trendline, which has cushioned the equity since February, and hasn't been breached on a daily closing basis since late January. Year-to-date, the shares are still up 14.4%.

clvs stock daily chart april 15

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