Options Volume Spikes on Sinking Perrigo Stock

Ireland is demanding $1.9 billion in back taxes from Perrigo

Perrigo Company (NYSE:PRGO) said it has been ordered by Ireland to pay $1.9 billion in back taxes for 2013. The bill comes after it was found that intellectual property sales of Elan Pharma -- which Perrigo acquired in 2013 in a corporate tax inversion -- were taxed incorrectly. In reaction, PRGO stock is down 26.5% to trade at $38.47, earlier hitting a nine-year low of $38.13.

This negative price action is nothing new for the over-the-counter pharmaceutical firm. Today's drop puts PRGO shares on track for their seventh straight loss, the longest daily losing streak since October 2017. Plus, the equity is pacing for a 45.8% quarterly loss -- its worst on record -- and has shed 55.9% year-to-date.

Perrigo options are flying off the shelves today, with around 6,500 calls and 2,000 puts on the tape, 15 times what's typically seen. Eleventh-hour traders are targeting the December 40 calls, where at least some of the activity appears to be of the buy-to-open kind.

Other speculators may be initiating new positions at the February 45 call, though there appears to be a mix of buying and selling occurring. Those purchasing the calls expect PRGO stock to climb back above $45 by February options expiration, while those writing the calls are betting the strike will serve as a short-term ceiling.