Amgen, Awaits FDA & Jumping the Gun (AMGN)
Amgen Inc. (NASDAQ: AMGN) had a bit of a SNAFU yesterday over a press release being issued and then retracted. The company said that Business Wire “accidentally” or erroneously released a statement on Monday from the company over a false Food and Drug Administration approval announcement regarding its Nplate. Business Wire confirmed that it prematurely issued the press release.
Nplate is treatment for a rare type of blood-platelet deficiency condition (autoimmune disorder chronic immune thrombocytopenic purpura) where blood platelets decline to the point that leads to serious bleeding.
This is still under FDA review. What is interesting for options and equity traders is that the company expects the actual FDA decision by July 23. That is five days before its earnings release, but is also after this coming Friday’s options expiration date. This unfortunately makes traders buy the August 2008 options, at least assuming the FDA isn’t going to make an early release on the data.
If you look at the trades you can see that options traders are going out farther to August for their speculation:
Call/Strike Volume OpInt
AUG08 $52.50 1,165 10,600
AUG08 $55.00 4,046 3,512
versus
Call/Strike Volume OpInt
SEP08 $50.00 1,734 13,587
SEP08 $52.50 678 6,509
SEP08 $55.00 75 17,776
Unfortunately traders are paying a double event risk because of the FDA action and the earnings release.
Jon C. Ogg
July 15, 2008