ABBV Options Traders React to Piper Jaffray Upgrade

The analysts think new drug releases could help Abbvie

Abbvie Inc (NYSE:ABBV) is trying to recover from last week's two-year low, getting a boost today from an upgrade to "overweight" from "neutral" at Piper Jaffray, which also set an $80 price target. The brokerage firm believes the stock could benefit from the release of the company's psoriasis treatment Skyrizi and arthritis treatment Rinvoq -- though it's still skeptical of the Allergan (AGN) deal. This has ABBV options traders opening new positions at a rapid pace.

At last check, both calls and puts were crossing at double the rate expected, with the weekly 8/30 series leading the way. Most popular overall is the 67.50-strike call, where buy-to-open activity looks likely, followed by the 65.50-strike put, where traders could be selling to open positions to bet on a short-term floor for the security. New positions are also opening at the 66- and 67-strike puts from the same weekly series.

Options traders at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have shown an unusual interest in long calls during the past two weeks, and this may be why the Schaeffer's put/call open interest ratio (SOIR) is a call-skewed 0.72. Abbvie's most populated contract overall is the front-month September 70 call.

The security has actually failed to live up to options traders' volatility expectations during the past year, according to its Schaeffer's Volatility Scorecard (SVS) of 22. And that's despite the fact that ABBV's 60-day historical volatility of 42.5% ranks in the 100th annual percentile.

The stock was last seen trading 0.7% higher at $67.02. While this puts ABBV on pace for a third straight win, the shares are still down more than 31% during the past year, and remain 3 points below the 50-day moving average, a trendline not touched since the June bear gap.