Schaeffer's Top Stock Picks for '25

Call Players Blitz Ariad Pharmaceuticals, Inc. (ARIA) on Brigatinib Update

Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) call options are outpacing put options by a 7-to-1 margin

Jun 6, 2016 at 10:39 AM
facebook X logo linkedin


It's a big day for biotech stocks, as an onslaught of drug data hits the Street. Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA), for example, said that more than half of participants using its lung cancer treatment, Brigatinib, reached the primary endpoint. Nevertheless, ARIA stock is off 2.4% at $8.76 -- and options volume is running at two times the average intraday rate.

While option volume is still light on an absolute basis, call options are outpacing put options by a 7-to-1 margin. This is just more of the same in ARIA's options pits, with traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) buying to open 13,831 calls over the past two weeks, versus just 1,453 puts.

Drilling down, the stock's July 10 call has seen the biggest rise in open interest over this time frame, with 12,612 contracts added. It seems safe to assume that most of this activity was of the buy-to-open kind, per data from the major options exchanges and Trade-Alert. In other words, traders are betting on a move to double-digits by the close on Friday, July 15, when back-month options expire.

However, there could be an ulterior motive behind the call buying at this out-of-the-money strike. Short interest accounts for a hefty 17.5% of ARIA's available float -- or 7.1 times the average daily trading volume -- meaning shorts may have been hedging their bearish bets against any upside risk.

Regardless of the reason, those purchasing ARIA's short-term options are willing to pay a pretty penny. Not only does the stock's Schaeffer's Volatility Index (SVI) of 104% rest in the 62nd annual percentile, but its 30-day at-the-money implied volatility of 73.2% rests above 76% of all other comparable readings taken in the past year. In other words, premium on ARIA's near-term options is pricing in relatively lofty volatility expectations at the moment.

Technically, ARIA has doubled since bottoming at a two-year low of $4.37 in mid-February. However, the $10 mark has proven elusive since a massive bear gap in October 2013 wiped out roughly two-thirds of ARIA's value in one fell swoop. In fact, Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) has closed in double-digit territory since Oct. 8, 2013.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical  levels, and top economic stories straight to your inbox.

 
 

Which of These SUB-$5 Stocks Could 26x From Here? (AD)

He called a rare 11x on Tesla…

Then he called a 26x on Workhorse…

Then an even rarer 35x on Nio Inc…

Now Tim Bohen says these 5 tiny “America First” stocks are next up in 2025.

They’re trading for less than $5 right now.

But thanks to Elon & Trump’s new alliance…

They could be off to the races in Trump’s first 100 days.

And right now for a limited time…

You can get the names & tickers for just $1 here. (AD)

10 Stock Picks FREE
 
 

Featured Articles from Trusted Partners:

🚀 One Stock Pick Could Change Everything in 2025
What if one stock pick could define your success next year? Get 10 expert-vetted stocks set for 2025—plus 5 bonus picks to watch now. Get the Report →

🆕 New Options Need New Trading Strategies
Zero-DTE options are the newest (and hottest) options to trade.  Professional traders have rushed into the market and are making a mint.  Don’t get left behind - learn all about these options, how to trade them, market setups to profit from, plus much more. Download now →

👀 Revealed: 3 Defensive Stocks for Your Portfolio
Worried about the market? This free report reveals 3 under-the-radar defensive stocks for uncertain times in any kind of economy.

 

 
 

FREE Report Download

 

Follow us on X, Follow us on Twitter