Advertisement
U.S. markets open in 2 hours 40 minutes
  • S&P Futures

    5,206.50
    -8.25 (-0.16%)
     
  • Dow Futures

    39,191.00
    -32.00 (-0.08%)
     
  • Nasdaq Futures

    18,191.00
    -40.50 (-0.22%)
     
  • Russell 2000 Futures

    2,046.40
    -3.40 (-0.17%)
     
  • Crude Oil

    82.57
    -0.15 (-0.18%)
     
  • Gold

    2,157.30
    -7.00 (-0.32%)
     
  • Silver

    25.10
    -0.16 (-0.63%)
     
  • EUR/USD

    1.0847
    -0.0029 (-0.27%)
     
  • 10-Yr Bond

    4.3400
    0.0000 (0.00%)
     
  • Vix

    14.58
    +0.25 (+1.74%)
     
  • GBP/USD

    1.2682
    -0.0046 (-0.36%)
     
  • USD/JPY

    150.5410
    +1.4430 (+0.97%)
     
  • Bitcoin USD

    63,121.58
    -4,795.43 (-7.06%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,711.30
    -11.25 (-0.15%)
     
  • Nikkei 225

    40,003.60
    +263.20 (+0.66%)
     

Do Options Traders Know Something About Amarin (AMRN) Stock We Don't?

Investors in Amarin Corporation plc AMRN need to pay close attention to the stock based on moves in the options market lately. That is because the Jan 25, 2019 $20.00 Call had some of the highest implied volatility of all equity options today.

What is Implied Volatility?

Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.

What do the Analysts Think?

Clearly, options traders are pricing in a big move for Amarin shares, but what is the fundamental picture for the company? Currently, Amarin is a Zacks Rank #3 (Hold) in the Medical – Biomedical and Genetics industry that ranks in the Top 18% of our Zacks Industry Rank. Over the last 30 days, two analysts have increased their earnings estimates for the current quarter, while none have dropped their estimates. The net effect has taken our Zacks Consensus Estimate for the current quarter from a loss of 10 cents to a loss of 5 cents in that period.

Given the way analysts feel about Amarin right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.

Looking to Trade Options?

Each week, our very own Dave Bartosiak gives his top options trades. Check out his recent live analysis and options trade for the NFLX earnings report completely free. See it here: Bartosiak: Trading Netflix's (NFLX) Earnings with Options or check out the embedded video below for more details:


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Amarin Corporation PLC (AMRN) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

Advertisement