INSY's implied volatility has spiked
The volatile year is continuing for Insys Therapeutics Inc (NASDAQ:INSY), with the shares soaring 20.7% today to trade at $1.04, earlier getting halted for volatility after a more than 80% surge. This price action follows news from last evening of the company's $225 million settlement with the federal government, while today it was announced that Chairman Steven Meyer has resigned. INSY options trading has picked up as a result.
Jumping right in, more than 2,100 call options have traded, compared to 575 puts, though both are well above the expected pace. The most popular option is the June 1 call, where new positions are opening, and it looks like many trades crossed right after the stock was halted shortly after 10 a.m. ET. Those buying the contract would be expecting Insys to extend its upside above this strike in the coming weeks. On the put side, positions are opening at the June 2 strike, mostly near the bid price.
Not surprisingly, you will probably want to pass on buying premium following today's spike, since it has driven up volatility expectations so much. Specifically, the 30-day at-the-money implied volatility was last seen at an annual high of 219.5%.
It'll be interesting to see if any INSY analysts respond to the news. There are still four brokerage firms tracking the equity, and the average 12-month price target among them is $5.60. The most recent move seen from this group was from May 14, when Janney downgraded its opinion to "neutral" from "buy." Ending with a close view of the charts, today's current price still leaves the shares below the 20-day moving average.
