AstraZeneca Stock Sinks After $32 Billion Acquisition

Digging into some of the option activity surrounding AstraZeneca and Alexion stocks

Digital Content Manager
Dec 14, 2020 at 2:47 PM
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AstraZeneca plc (NASDAQ:AZN) is sinking this afternoon, off 7% at $50.52 at last check, after the pharmaceutical giant and COVID-19 vaccine hopeful agreed to buy Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) for $39 billion. While AZN is pulling back after the agreement, Alexion stock is surging, up over 30.3% and last seen trading at $157.59. The security is receiving plenty of attention from analysts, too. No less than eight brokerages have hiked their price targets, including Jefferies to $175 from $120. The analyst called the deal "healthy" and cited Alexion's revenue streams, which are concentrated mostly in its Soliris drug, and its Ultomirirs drug, which is likely to see completion by 2022. 

While AZN is stepping lower today, this hasn't done much to deter options bulls, who seem to be out in full force. So far, 50,000 calls and 13,000 puts have crossed the tape -- four times the intraday average. The most popular contract is the January 2021 57.50-strike call, followed by the April 55 call. 

Alexion is getting an unusual amount of attention in the options pits, too. So far, 21,000 calls have exchanged hands, or 19 times what is typically seen at this point. The weekly 12/24 155-strike call is getting the most attention, followed by the 150-strike call in the same series, with new positions being opened at both. This suggests these traders are expecting the underlying stock to maintain these gains by the time contracts expire on Friday, Dec. 24. 

In fact, ALXN is trading at four-year highs today, toppling long-time pressure at the $140  mark, which rejected several rally attempts in 2018 and 2019. The security now sports a 45.8% year-to-date lead, and is pacing for its best day in 18 years.

ALXN Char Dec 14

Meanwhile, AZN has been particularly volatile since falling from its late-August record highs. The security is still clinging to a slim 1.1% year-to-date gain, while testing support at its 320-day moving average -- a trendline that's acted as a floor for AZN in the past. 

AZN Chart Dec 14

 

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