SRPT could be a more lucrative short-term opportunity for biotech bulls
We recently outlined the worst stocks to own in June, per data from the past 10 years, and topping the list was red-hot drugmaker Regeneron Pharmaceuticals Inc (NASDAQ:REGN). Although REGN stock is currently flirting with annual-high territory, it could be in for a rough few weeks, if past is prologue. Below, we'll discuss why REGN traders may want to consider a short-term options hedge, and why fellow biotech stock Sarepta Therapeutics Inc (NASDAQ:SRPT) might be a better bullish play this month.
REGN Stock Has Been the Worst in June
Over the past decade, REGN has finished the month of June in the black just one time, according to recent data from Schaeffer's Senior Quantitative Analyst Rocky White. In fact, REGN has been the worst S&P 500 Index (SPX) stock to own in the month of June, averaging the steepest loss of 10.14%.
Regeneron stock could be due for a breather, too. The shares have surged 31% in 2017, and sport a 14-day Relative Strength Index (RSI) in overbought territory. Plus, REGN stock is now staring at a trendline connecting its higher highs since early 2016, as well as possible congestion in the $480-$490 area, which acted as support for the shares in 2015. At last check, Regeneron shares were 3.8% higher at $483.50, after peaking at an annual high of $484.99 earlier.
REGN Options Are Attractive Right Now
Recent REGN options buyers have been much more bullish than usual, too. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open more than two Regeneron call options for every put during the past two weeks. The resulting 10-day call/put volume ratio of 2.12 is higher than 86% of all others from the past year. Should REGN stock run into a familiar roadblock, or should the shares react negatively to next week's shareholder meeting, an unwinding of optimism in the options pits could exacerbate the pullback.
However, REGN shareholders looking to hedge with short-term puts can do so at a relative discount. The stock's Schaeffer's Volatility Index (SVI) of 32% is lower than 78% of all other readings during the past year, suggesting Regeneron's short-term options are attractively priced right now, from a historical volatility standpoint.
SRPT Stock Testing Historically Bullish Moving Average
As alluded to earlier, Sarepta Therapeutics stock could be a more lucrative alternative to Regeneron in the short term, if recent history repeats. SRPT stock has been bouncing along its 320-day moving average, which has been a bullish signal in the past. According to data from White, after Sarepta stock's last five pullbacks to this trendline, the stock was higher one month later 80% of the time, averaging an enormous gain of 18.91%. However, in 2017, the stock's upside momentum has stalled several times in the $37-$39 region. At last check, SRPT stock was up 1.3% at $31.11 -- a roughly 50% discount to the stock's 14-year high of $63.73 in late September.
Options traders who'd like to roll the dice on another short-term bounce for Sarepta Therapeutics stock can scoop up the stock's options at a relative discount. Specifically, SRPT sports an SVI of 58% -- in just the 4th percentile of its annual range.
It should be noted that Sarepta Therapeutics will also host its annual shareholder meeting next week, and has been the topic of M&A chatter recently. For those not interested in SRPT shares this month, perhaps this list of the 25 best stocks to own in June will pique their curiosity.
We recently outlined the worst stocks to own in June, per data from the past 10 years, and topping the list was red-hot drugmaker Regeneron Pharmaceuticals Inc (NASDAQ:REGN). Although REGN stock is currently flirting with annual-high territory, it could be in for a rough few weeks, if past is prologue. Below, we'll discuss why REGN traders may want to consider a short-term options hedge, and why fellow biotech stock Sarepta Therapeutics Inc (NASDAQ:SRPT) might be a better bullish play this month.
REGN Stock Has Been the Worst in June
Over the past decade, REGN has finished the month of June in the black just one time, according to recent data from Schaeffer's Senior Quantitative Analyst Rocky White. In fact, REGN has been the worst S&P 500 Index (SPX) stock to own in the month of June, averaging the steepest loss of 10.14%.
Regeneron stock could be due for a breather, too. The shares have surged 31% in 2017, and sport a 14-day Relative Strength Index (RSI) in overbought territory. Plus, REGN stock is now staring at a trendline connecting its higher highs since early 2016, as well as possible congestion in the $480-$490 area, which acted as support for the shares in 2015. At last check, Regeneron shares were 3.8% higher at $483.50, after peaking at an annual high of $484.99 earlier.
Recent REGN options buyers have been much more bullish than usual, too. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open more than two Regeneron call options for every put during the past two weeks. The resulting 10-day call/put volume ratio of 2.12 is higher than 86% of all others from the past year. Should REGN stock run into a familiar roadblock, or should the shares react negatively to next week's shareholder meeting, an unwinding of optimism in the options pits could exacerbate the pullback.
However, REGN shareholders looking to hedge with short-term puts can do so at a relative discount. The stock's Schaeffer's Volatility Index (SVI) of 32% is lower than 78% of all other readings during the past year, suggesting Regeneron's short-term options are attractively priced right now, from a historical volatility standpoint.
SRPT Stock Testing Historically Bullish Moving Average
As alluded to earlier, Sarepta Therapeutics stock could be a more lucrative alternative to Regeneron in the short term, if recent history repeats. SRPT stock has been bouncing along its 320-day moving average, which has been a bullish signal in the past. According to data from White, after Sarepta stock's last five pullbacks to this trendline, the stock was higher one month later 80% of the time, averaging an enormous gain of 18.91%. However, in 2017, the stock's upside momentum has stalled several times in the $37-$39 region. At last check, SRPT stock was up 1.3% at $31.11 -- a roughly 50% discount to the stock's 14-year high of $63.73 in late September.
It should be noted that Sarepta Therapeutics will also host its annual shareholder meeting next week, and has been the topic of M&A chatter recently. For those not interested in SRPT shares this month, perhaps this list of the 25 best stocks to own in June will pique their curiosity.
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