Today, among the underlying components of the NYSE, we saw noteworthy dark pool trading on Xenon Pharmaceuticals Inc. (XENE), which opened today at $19.64.
These orders come after Xenon Pharmaceuticals reported its second-quarter earnings, reported August 14th, where its numbers were fairly weak, with sales of $2.2M missing analyst predictions by 4.7%, and (statutory) losses of $0.51 per share being slightly larger than what the analysts had expected.
As seen, in spite of the weak earnings report, dark pool trades have been consistently buying at the ask or even above the ask in some cases (such as the $325,000 and $430,000 lots at the $18.85 and $17.20 spot prices, respectively).
What makes these trades noteworthy are how they have come about with significant and unusual options betting on the options market, seen here:
There were a large series of orders, including a sweep of 2,344 contracts traded on the $10 strike put option, traded at the ask, dated for October 15th, 2021, representing approximately 234,400 shares.
These bets are dated in line with Xenon Pharmaceuticals Inc.’s next trial results, which should be coming late September to mid-October; as these were puts traded on the ask or higher, these alone represent a bearish strategy, therefore this trader is speculating on a negative outcome of these trials.
However, it must be stated that the dark pool shows purchases of shares, over the past month representing greater than 400,000 units traded, which would be at least or greater than the number of shares these unusual options contracts represent. It is impossible to know who the dark pool traders were or what their intentions were in exchanging the units of this company, but the options strategies above are clearly one-sided.
Below, the October 15th 15 strike put option chain is now the most active, 930% above its historical seven-day put volume; the put-call ratio on XENE is now 1.46, or 72.7% puts and 27.3% calls, a dramatic shift from the historical mean.
Furthermore, per the chart below, representing XENE’s price since June 16th, 2021, there was 3,598 put volume today, September 3rd, 2021, as compared to a previous high of 829 on August 27th, 2021. Open interest, seen in yellow, has increased to 5,693 contracts as of yesterday’s close.
We will be following Xenon Pharmaceuticals Inc. closely in the coming days and weeks, so be sure to subscribe if you are interested in this story and more.
For more information about XENE's unusual options or dark pool activity, visit unusualwhales.com.