Options Hot as ACADIA Pharmaceuticals Stock Soars

ACAD short sellers are getting squeezed today

by Karee Venema

Published on Sep 9, 2019 at 10:26 AM
Updated on Jun 24, 2020 at 10:16 AM

ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) announced positive late-stage data for its drug pimavanserin in patents suffering from dementia-related psychosis. The San Diego-based biopharmaceutical firm also said it is ending the study early on the recommendation from an independent monitoring committee, and will be meeting with the Food and Drug Administration (FDA) to discuss submitting a marketing proposal next year.

In reaction, ACAD stock is up 72.89% today at $41.14 -- fresh off a four-year peak of $43.98, and eyeing its biggest one-day gain since November 2012. Analysts have yet to react to this jolt higher, though there's plenty of room for bull notes to come through. While four of 11 brokerages maintain a lukewarm "hold" rating, the average 12-month price target of $33.75 is a nearly 18% discount to current levels.

Today's upside is certainly catching short sellers off guard. While short interest declined 3% in the most recent reporting period, the 12.88 million ACAD shares still controlled by bears represents 10.5% of the security's float, or 10.2 times the average daily pace of trading. A short squeeze could keep the wind at ACADIA Pharmaceuticals' back.

ACAD options traders, meanwhile, are in overdrive, with more than 3,000 contracts on the tape already -- 22 times what's typically seen at this point. The weekly 9/13 40-strike put is most active, and it looks like sell-to-open activity may be occurring here. By doing so, put writers expect ACADIA Pharmaceuticals to hold above the round $40 through expiration at the close this Friday, Sept. 13.


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