The Drug Stock Down 60% After FDA Rejection – Schaeffers Research (blog)

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U.S. stocks are trading slightly lower this morning, as third-quarter earnings season commences. Among the stocks making moves this morning are banking institution and blue-chip powerhouse JPMorgan Chase & Co (NYSE:JPM), pizza restaurant chain Domino’s Pizza, Inc. (NYSE:DPZ), and drugmaker AcelRx Pharmaceuticals Inc (NASDAQ:ACRX). Here’s a closer look at what’s moving shares of JPM, DPZ, and ACRX.

JPMorgan Stock Dips After Earnings

While JPMorgan Chase reported better-than-expected third-quarter earnings, the bank’s bond trading revenue was weaker than forecast. The blue-chip stock was last seen trading fractionally lower at $96.67, likely to the dismay of recent options traders. JPM’s Schaeffer’s put/call open interest ratio (SOIR) of 0.66 ranks in only the 7th percentile of its annual range, which suggests that near-term options traders have rarely been more call biased in the past 12 months. Still, JPM stock has added more than 12% in 2017, and touched a record high of $97.64 on Oct. 6.

DPZ Stock Takes a Breather After Same-Store Sales Miss

Shares of Domino’s Pizza have dipped 2.4% to $204.20, but seem to have found support at their 10-day and 20-day moving averages. While the pizza company reported better-than-expected third-quarter earnings, same-store sales growth fell short of expectations. Prior to today, Domino’s stock had been on a tear, rallying roughly 20% from its August lows amid a sea of skepticism. Just five of 15 analysts consider DPZ stock worthy of a “buy” or better rating, leaving the door wide open for upgrades if the equity resumes its recent ascent.

ACRX Stock Flatlines After FDA Rejection

ACRX shares have taken a major hit after the Food and Drug Administration (FDA) rejected the firm’s opioid painkiller, Dsuvia. Just one day after touching an annual high of $5.75, the drug stock was last seen 60% lower at $2.15 — within pennies of a new low. Some recent option buyers are likely cheering the news. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ACRX sports a 50-day put/call volume ratio of 0.43, ranking in the 94th percentile of its annual range, suggesting options traders have bought to open puts over calls at a faster-than-usual clip during the past 10 weeks.

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