{"id":26635,"date":"2015-01-23T16:09:42","date_gmt":"2015-01-24T00:09:42","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=26635"},"modified":"2015-01-23T16:21:13","modified_gmt":"2015-01-24T00:21:13","slug":"array-biopharma-pandora-big-for-options-buyers","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2015\/01\/23\/array-biopharma-pandora-big-for-options-buyers\/","title":{"rendered":"Array BioPharma and Pandora Deliver Big for Options Buyers"},"content":{"rendered":"<p>I wish I could find a report that looks back on big stock moves and looks for any tell-tale options activity. It is always difficult to translate options action into predictions on stocks, but having a &#8220;hindsight&#8221; report could prove educational. In the meantime, we will have to settle for sporadic reports like this piece (or let me know where I should look).<\/p>\n<p>On Friday, January 23, Array BioPharma, Inc. (ARRY) soared 41% on 36M shares traded (about 18x the average rolling 3-month volume).<\/p>\n<p><center><br \/>\n<figure id=\"attachment_26637\" aria-describedby=\"caption-attachment-26637\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150123_ARRY.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150123_ARRY.png\" alt=\"Array Biopharma soars on Novartis deal\" width=\"550\" height=\"375\" class=\"size-full wp-image-26637\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150123_ARRY.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150123_ARRY-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-26637\" class=\"wp-caption-text\">Array Biopharma soars on Novartis deal<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>The chart shows a very nice technical setup that could have been bought without knowing anything about ARRY&#8217;s fundamental story. The gap up on December 4, 2014 sent the stock soaring above its 200DMA and the subsequent dribble downward finally ended with a brief breakdown below 50DMA support. A buy on the 50DMA recovery would have made a lot of sense from a technical standpoint, especially given the earlier 200DMA breakout.<\/p>\n<p>Here is a snippet of <a href=\"http:\/\/investor.arraybiopharma.com\/phoenix.zhtml?c=123810&#038;p=irol-newsArticle&#038;ID=2009991\" target=\"_blank\">the news<\/a> that caused all the excitement:<\/p>\n<blockquote><p>&#8220;Array BioPharma Inc. (NASDAQ: ARRY) today announced that it has reached a definitive agreement with Novartis Pharma AG to acquire worldwide rights to encorafenib (LGX818), a BRAF inhibitor currently in Phase 3 development.  This agreement is conditional on the closing of transactions announced by Novartis and GlaxoSmithKline PLC (GSK) on April 22, 2014, which are expected to close in the first half of 2015, and the agreement remains subject to the receipt of regulatory approvals.&#8221;\n<\/p><\/blockquote>\n<p>Here is a snapshot of at least one trader who made a LOT of money off today&#8217;s action: according to briefing.com, on January 20, 2015 ARRY Jun $5 calls traded 1,570 contracts versus open interest of 4,890 with almost all the volume attributable to one trade near the ask. The trades drove implied volatility from 83% to 94%. According to data from Etrade.com, those calls sold for around $0.95 each and are now worth about $2.70, a nifty 184% gain. Given volume of 2,093 contracts today, I can imagine this lucky trader cashed out.<\/p>\n<p>In other options news, Pandora (P) soared 10% apparently in response to the results of a survey from <a href=\"http:\/\/www.otrglobal.com\/research-reports\" target=\"_blank\">OTR Global<\/a>. <a href=\"http:\/\/www.thestreet.com\/story\/13021231\/1\/pandora-p-stock-gains-on-otr-global-report.html\" target=\"_blank\">According to TheStreet.com<\/a>:<\/p>\n<blockquote><p>&#8220;The 17 ad agencies included in the OTR Global survey said they are generally pleased with the performance of ads on Pandora, and plan on &#8220;significantly&#8221; boosting their ad spend on the streaming music service this year.<\/p>\n<p>The OTR Global survey also said that Pandora local ad spend increased 90% year over year in the fourth quarter.&#8221;<\/p><\/blockquote>\n<p><center><br \/>\n<figure id=\"attachment_26638\" aria-describedby=\"caption-attachment-26638\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150123_P.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150123_P.png\" alt=\"Pandora pops on favorable OTR Global survey results\" width=\"550\" height=\"375\" class=\"size-full wp-image-26638\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150123_P.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150123_P-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-26638\" class=\"wp-caption-text\">Pandora pops on favorable OTR Global survey results<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"http:\/\/www.freestockcharts.com\/platform\/v1\" target=\"_blank\">FreeStockCharts.com<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>The options trade that made big money on Pandora was VERY fortuitous. According to briefing.com, M&#038;A rumors drove the purchase of about 10,000 call options versus under 1,000 put options. Briefing.com specifically called out the Jan $16 weekly calls expiring TODAY given volume of 4,440 options versus an open interest of 1,100. This action helped drive implied volatility from a mere 3% to 58%. As the chart above shows, the low implied volatility made sense given Pandora came into the week trading around lows (levels last seen in mid-2013). <\/p>\n<p>The VERY interesting trade here is a potential fade of Pandora ahead of earnings. It seems the trade was all about anticipating good results from the OTR Global survey and NOT earnings or M&#038;A action. The on-going downtrend from the all-time peak in March, 2014 seems to support a negative bias toward earnings. I would of course NEVER short a stock like this, only options (for example, <a href=\"http:\/\/finance.yahoo.com\/q\/ks?s=P+Key+Statistics\" target=\"_blank\">short interest is a relatively large 14.6% of the float<\/a>). I will write more if I decide to make a trade ahead of earnings.<\/p>\n<p>Be careful out there!<\/p>\n<p>Full disclosure: no positions unfortunately<\/p>\n","protected":false},"excerpt":{"rendered":"<p>I wish I could find a report that looks back on big stock moves and looks for any tell-tale options activity. It is always difficult to translate options action into predictions on stocks, but having a &#8220;hindsight&#8221; report could prove educational. In the meantime, we will have to settle for sporadic reports like this piece &#8230; <a title=\"Array BioPharma and Pandora Deliver Big for Options Buyers\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2015\/01\/23\/array-biopharma-pandora-big-for-options-buyers\/\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[300,599,32],"tags":[1487,1488,1005,155,923,924],"class_list":["post-26635","post","type-post","status-publish","format-standard","hentry","category-health-care","category-internet","category-options","tag-array-biopharma","tag-arry","tag-inc","tag-options-trading","tag-p","tag-pandora"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Array BioPharma and Pandora Deliver Big for Options Buyers - ONE-TWENTY TWO: Trading Financial Markets<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/drduru.com\/onetwentytwo\/2015\/01\/23\/array-biopharma-pandora-big-for-options-buyers\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Array BioPharma and Pandora Deliver Big for Options Buyers - ONE-TWENTY TWO: Trading Financial Markets\" \/>\n<meta property=\"og:description\" content=\"I wish I could find a report that looks back on big stock moves and looks for any tell-tale options activity. 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