Surging Pharmaceutical Stock Ambushed by Options Traders

INO is up 1,400% over the last nine months

Deputy Editor
Jun 29, 2020 at 12:53 PM
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Thanks to data courtesy of Schaeffer's Senior Quantitative Analyst Rocky White, we have a list below comprised of 20 stocks that have attracted the highest weekly options volume over the last 10 trading days. New entrants to the list are highlighted in yellow, and this week's standout is Inovio Pharmaceuticals Inc (NASDAQ:INO), whose shares could see a notable surge as a $71 million contract with the federal government will help the company in its efforts to develop a vaccine for COVID-19. Below, we'll take a closer look at the options activity surrounding INO and see how its been performing on the charts lately.

Most Active Options June 29

It's an understatement to say that Inovio stock has risen significantly since flashing a bullish signal to start the summer. In just one month, INO has doubled in value, nabbing a 20-year high of $33.79 last Friday. Longer term, the equity boasts an astounding 1,403.4% surge over the last nine months. Today, INO is up a tame 2.1% to trade at $30.60.

A short squeeze is definitely fueling some of this unprecedented surge. Short interest tailed off in the most recent reporting period, yet the 25.78 million shares sold short still accounts for a whopping 26.3% of INO's total available float. 

Looking at White's data, over the past 10 days, 428,404 calls and 110,871 puts have exchanged hands. Today's trading leans bullish too, with 38,000 calls across the tape so far. The weekly 7/2 30-strike call is most popular, but new positions are also being opened at the 20-strike put from the same series. And while calls outnumber puts on an overall basis, the rate of put buying has picked up lately. This is per Inovio stock's 50-day put/call volume ratio of 0.36 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) that ranks higher than all but 2% of readings in its annual range. 

Echoing this is INO's Schaeffer's put/call open interest ratio (SOIR) of 0.67. This ratio sits in the top percentile of its annual range, suggesting short-term option players are extremely put biased at the moment.

 

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