Yesterday, we wrote about a “smart money” trader (aka someone with insider knowledge) buying up a huge lot of DEC $31 calls in ACADIA Pharmaceuticals (ACAD). You can read that article here. That smart trader bought 2527 DEC 31 calls in ACAD on Friday December 2, at the ask price of $1.10. That makes for a fairly large leap of faith of $278,000 in call options.
ACAD stock was sitting idly at around $26 at the time the trader purchased those $31 calls. We don’t know where this trader found his crystal ball, but we’d certainly like to get one for ourselves. This morning, ACADIA Pharmaceuticals is rising higher, hitting a high of $28.78 or up $1.81. It has since settled down a little at $28.18 as of 11:07 am. Volume traded so far is just over 500,000 shares, which isn’t that much above normal.
Those Dec 31 calls were up as high as $2 and change making for a very quick double. Currently the ACAD DEC $31 calls are bidding $1.55 and asking $2.00, with last trade of $1.85. Volume has only been 261 contracts, so this smart guy is clearly holding on for more profit. Which means the goods news is not out yet.
It’s still not clear what is causing this share price spike. Acadia has had a fair bit of positive news this month already, but nothing has been announced Friday or Monday. The company saw sales of its FDA approved drug Nuplazid, used to treat Parkinson’s disease, at $5.3 million for the quarter, much higher than the $2.6 million Wall Street was expecting. That, thanks to expanded medicare coverage and private insurer coverages. But still, that news was already baked in to the share price. Some other news must be coming to explain why this trader knew to buy $278,000 worth of ACAD options.
We could speculate all day on what this traders motives were, but we’ll just sit back and and wait for the big news.