Traders rushed to place their bets on Acme Packet, Inc. (
APKT
) and Biodel Inc. (
BIOD
) on Wednesday, with option volume rising well beyond the norm for
both stocks. Speculators are scooping up bearish bets ahead of
APKT's turn in the earnings spotlight, while calls have gained
popularity as BIOD awaits a highly anticipated regulatory
decision.
Acme Packet, Inc.
Puts were unusually popular on APKT yesterday, with volume
surging to roughly four times the expected level. A total of 6,822
puts changed hands on the stock during the course of Wednesday's
session, compared to just 2,211 calls.
On the International Securities Exchange (ISE) alone,
speculators on Wednesday bought to open 2,752 puts on APKT,
compared to 134 calls. The security's single-day ISE put/call
volume ratio of 20.54 indicates a clear bias toward bearish bets
over their bullish counterparts.
Yesterday's skeptically skewed action simply continues a recent
trend for APKT, which now sports an inflated 10-day ISE put/call
volume ratio of 2.45. This reading ranks above 90% of other such
ratios taken during the previous year, as traders have purchased
puts over calls at a faster clip just 10% of the time.
In fact, APKT's Schaeffer's put/call open interest ratio (SOIR)
of 2.73 reveals that puts nearly triple calls among options slated
to expire within three months. This ratio arrives in the 80th
percentile of its annual range, suggesting that short-term options
players have been more bearishly aligned just 20% of the time.
Short sellers also maintain a noteworthy stake in APKT, despite
a 40% decline in short interest during the past month. These
pessimistic positions still account for 5.3% of the equity's float,
as plenty of skeptics are still betting on the stock to slide.
This heavy-handed pessimism is remarkable, when you consider the
fact that APKT has surged nearly 266% year-to-date. The shares
tapped a fresh annual high of $40.99 earlier today, extending a
lengthy uptrend along the support of their 10-week and 20-week
moving averages.
However, in light of the stock's impressive price action, it's
actually possible that APKT investors are responsible for the
recent uptick in put volume. By purchasing puts on the stock,
shareholders can lock in some paper profits and ensure a favorable
exit price on their stake, even if APKT should swallow a drastic
downturn on the charts.
The company's looming quarterly report could have easily
inspired an urge to hedge, as APKT is slated to take the earnings
stage after tonight's closing bell. Analysts are looking for a
third-quarter profit of 19 cents per share, up from 9 cents in the
year-ago period. APKT has topped Wall Street's consensus profit
expectations in each of the past four quarters.
Biodel Inc.
BIOD drew a heavy dose of call volume on Wednesday, with
activity climbing to three times the expected level. Approximately
14,000 calls changed hands during the course of the session,
compared to the equity's average daily call volume of about 4,500
contracts. Meanwhile, only 5,350 puts were exchanged during the
course of the session.
Data from the ISE confirms a strong bias toward bullish bets on
BIOD. On Wednesday, traders on the exchange bought to open 1,099
calls and just 45 puts, netting the shares a single-day ISE
call/put volume ratio of 24.42.
Taking a slightly longer-term look, BIOD has now garnered a
10-day ISE call/put volume ratio of 3.51. This ratio arrives in the
83rd percentile of its annual range, indicating that speculators
have scooped up calls over puts at a faster-than-usual pace in
recent weeks.
However, it's worth noting that short interest on BIOD surged by
48.3% during the past month, and shorted shares now account for a
lofty 26.8% of the equity's float. With short interest and
buy-to-open call volume rising in tandem, it's possible that
traders are using calls to hedge their bearish bets.
Speculation is heating up on BIOD ahead of a key Food and Drug
Administration (FDA) decision, with the agency set to review the
firm's injectable diabetes treatment at the end of this week.
Judging by the equity's recent price action, BIOD could definitely
benefit from a favorable ruling -- since Sept. 30, the stock has
blazed a path lower under pressure from its 10-day moving
average.
