Listening to volatility
- QURE prominent on two volatility scans this week
- Options volatility nearly four times price volatility
- Shares up roughly 10% from March 18-week low
Traders who keep an eye on volatility would have had trouble not noticing uniQure (QURE) on Tuesday. The biotech stock’s 1%-plus rally wasn’t particularly remarkable, but QURE not only hit a new 52-week implied volatility (IV) high, it was second from the top of yesterday’s scan for highest 30-day IV levels:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
Also, QURE’s 159.81 IV was nearly four times as high as its 30-day historical volatility (HV), which means the options market was expecting the stock to move much more over the next month or so relative to what it did over the past month.
Clearly, the options market is pricing in a high level of expected volatility for QURE. That’s nothing new for the biotech space (see “Market Mover Update,” below). The question, as always, is whether those expectations will turn out to be correct. QURE’s price chart shows the stock has seen plenty of movement over the past several months, rallying 52% in less than three weeks last November (tagging its highest price since December 2021), then falling around 36% to an 18-week low in March:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
This chart barely hints at QURE’s multi-year range, though—the stock traded as high as $82.49 in 2019 and fell as low as $12.52 last year. But it’s worth noting that its recent high IV has occurred while the stock is still trading within a consolidation that has been in place since the March lows. In other words, the stock may have calmed down recently relative to its past performance, but options traders aren’t necessarily expecting that to continue.
In addition to the impossibility of knowing when a price move may occur (if one happens at all), high IV doesn’t say anything about which direction it will take. For reference, the Street’s average 12-month price target for QURE is around $55, with a range of $38 to $90.1 If nothing else, perhaps the options market’s volatility expectations are in sync with the apparently wide range of analyst expectations.
Market Mover Update: Another biotech stock that appeared in this space not too long ago, NovoCure (NVCR), fell 43% on Tuesday after the release of the latest clinical trial results for its tumor-treating fields therapy (see “Stock pauses, options signal move”).
Crude oil prices have been very busy to start the week, but the net result has been a scratch. After pulling back sharply from a one-month high of $75.06 on Monday to close little changed at $72.15, on Tuesday July WTI crude oil futures (CLN3) initially fell 2.5% to an intraday low of $70.13 before rebounding to close little changed at $71.74.
Today’s numbers include (all times ET): Mortgage applications (7 a.m.), International Trade in Goods and Services (8:30 a.m.), EIA Petroleum Status Report (10:30 a.m.), Consumer Credit (3 p.m.).
Today’s earnings include: Campbell Soup (CPB), Ollie’s Bargain Outlet (OLLI), Verint (VRNT).
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1 TipRanks. uniQure (QURE) Stock Forecast & Price Target. 6/6/23.