Synergy Pharmaceuticals Inc fka SGYPQ

[Snackman]

Is the Options Market Predicting a Spike in Synergy Pharmaceuticals (SGYP) Stock?
Zacks Equity Research
ZacksOctober 3, 2018
Is the Options Market Predicting a Spike in Synergy Pharmaceuticals (SGYP) Stock?

Investors need to pay close attention to Synergy Pharmaceuticals (SGYP) stock based on the movements in the options market lately.

Investors in Synergy Pharmaceuticals Inc. SGYP need to pay close attention to the stock based on moves in the options market lately. That is because the Oct 19, 2018 $2.00 Call had some of the highest implied volatility of all equity options today.

What is Implied Volatility?

Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.

What do the Analysts Think?

Clearly, options traders are pricing in a big move for Synergy Pharmaceuticals shares, but what is the fundamental picture for the company?

Currently, Synergy Pharmaceuticals is a Zacks Rank #2 (Buy) in the Medical - Drugs that ranks in the Top 31% of our Zacks Industry Rank. Over the last 60 days, one analyst has increased the earnings estimates for the current quarter, while none have dropped the estimates. The net effect has taken our Zacks Consensus Estimate for the current quarter from a loss of 16 cents per share to a loss of 13 cents in that period.

Given the way analysts feel about Synergy Pharmaceuticals right now, this huge implied volatility could mean there’s a trade developing. Often times, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.