Under The Hood Of Options Chain Implications — Understanding How Options Data Can Help Inform Investment Decisions

Under The Hood Of Options Chain Implications — Understanding How Options Data Can Help Inform Investment Decisions

As many investors are aware, options market data can provide some critical insight into future price movements of underlying common stock. It’s often possible to tell how the broader market perceives a company by looking at how options traders are trading it.

As a refresher: A "call" or call option is a right to buy an asset at a predetermined price. If traders are buying more puts than calls, it indicates that they expect the price of the underlying security to go down. If they are buying more calls than puts, it suggests that they see a bull market ahead for the security.

But options data alone is typically not enough, and it’s always important to conduct one’s own fundamental analysis; for instance, in the pharmaceuticals industry, one could look at factors like upcoming biologics license applications (BLA) - these are usually submitted by companies developing vaccines and other allergenic drug products, blood products, and cellular and genetic therapies.

As an example, recent options data points could be helpful in understanding how traders feel about what the future may hold for Protalix BioTherapeutics Inc. PLX. This Israel-based pharmaceutical company focuses on developing, producing, and commercializing recombinant therapeutic proteins produced through its proprietary ProCellEx® plant cell-based protein expression system. 

Momentum Toward Finding A Cure For Fabry?

Protalix received good news recently from its trial evaluation of the safety and efficacy of its Fabry disease drug compared to benchmark drug agalsidase beta (as part of what is referred to as the BALANCE trial). The study supported Protalix’s efforts to combat Fabry disease, which affects the heart, kidneys, brain, central nervous system, and skin. It is an inherited condition passed from parent to child and is sometimes called Anderson-Fabry disease.

Companies currently working on developing gene therapies for Fabry disease include  Avrobio Inc. AVRO, Freeline Therapeutics Holdings PLC FRLN, and Sangamo Therapeutics Inc. SGMO.

Protalix Positive About Its Q2 Performance

Encouraged by the results of their trial, Protalix and its partner Chiesi Global Rare Diseases have announced new topline data from the study. Because the BALANCE trial met its primary endpoint and the drug showed favorable tolerability and immunogenicity profile, Protalix says it will be included in its planned BLA application to the Food and Drug Administration (FDA) by the end of 2022. 

A BLA is a request to distribute a biologic across states. It is usually submitted after an investigational new drug or an investigational device exemption and after the appropriate studies have been conducted.  A biologics license application generally applies to vaccines, allergenic drug products, blood products, and cellular and genetic therapies.

Resubmissions of BLA applications are made to answer any company deficiencies that need to be addressed by the applicant before approval.

The recent study results are one of the positive momentum examples pointed out by Protalix at the end of the second quarter of 2022, including a 36% increase in revenue to $8.8 million over results from the second quarter of 2021 and license revenue and research and development services up 69% to $5.4 million. A look at the options market data for Protalix could help investors understand how the broader market sees these factors impacting the company’s stock.

Traders who are unfamiliar with the complexity of options may want to take the dive into learning more to help round out indicators, especially for individual tickers like PLX — and even traders that are already used to observing the options chain, bid/ask spread, implied volatility, and more may want to take a deeper look at the implications of what the market is saying, such as expectations on clinical trials, financial results, and what the future may look like. 

For more information on Protalix BioTherapeutics, visit www.protalix.com

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Featured photo by Nicholas Cappello on Unsplash

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