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Some investors use the put/call ratio as a contrarian indicator – when it reaches extremely high levels (i.e. large number of put options vs. call options), it may indicate that a turnaround is imminent.

Here we present 4 biotech stocks that are currently seeing very bearish options sentiment, with sharp increases in the put/call ratio over the last two weeks, up to the highest levels of their annual put/call ranges.



Do you think these stocks will soon turn around? Use this list as a starting-off point for your own analysis.

List sorted by increase in put/call ratio.

1. Vical Inc. (NASDAQ:VICL): Biotechnology Industry. Market cap of $309.79M. Put/Call ratio has increased 213.04% over the last ten trading days (from 0.23 to 0.72, currently placed at 100% of the annual p/c range). The stock has had a good month, gaining 32.92%.

Recent Developments: Announced, along with University of Washington, receiving an additional U.S. patent covering DNA vaccines for herpes simplex virus type 2 (May 2011). Announced receiving a European patent for TransVax, the company’s DNA vaccine for cytomegalovirus (April 2011).

2. Qiagen NV (NASDAQ:QGEN): Biotechnology Industry. Market cap of $4.69B. Put/Call ratio has increased 66.67% over the last ten trading days (from 1.41 to 2.35, currently placed at 88% of the annual p/c range). It's been a rough couple of days for the stock, losing 5.45% over the last week.

Recent Developments: Cellestis Limited announced entering into a Scheme Implementation Deed with Qiagen proposing that a wholly owned subsidiary of Qiagen acquire all ordinary shares of Cellestis for cash (April 2011).

3. Medivation, Inc. (NASDAQ:MDVN): Biotechnology Industry. Market cap of $808.63M. Put/Call ratio has increased 23.33% over the last ten trading days (from 0.3 to 0.37, currently placed at 72% of the annual p/c range). The stock is a short squeeze candidate, with a short float at 9.19% (equivalent to 6.72 days of average volume).

Recent Developments: Announced, along with Astellas Pharma Inc., initiating a Phase II clinical trial of MDV3100, the first hormonal therapy for treating prostate cancer (May 2011).

4. Jazz Pharmaceuticals, Inc. (NASDAQ:JAZZ):
Biotechnology Industry. Market cap of $1.10B. Put/Call ratio has increased 14.14% over the last ten trading days (from 0.99 to 1.13, currently placed at 91% of the annual p/c range). This is a risky stock that is significantly more volatile than the overall market (beta = 2.46).

Recent Developments: The company raised FY11 guidance to revenue of $237-250 million while analysts were expecting revenue of $249 million (May 2011).

*Options data sourced from Schaeffer’s, recent developments sourced from Reuters, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 4 Biotech Stocks with Extremely Bearish Options Sentiment