Vaccine Stock Explodes After Sanofi Deal

Novavax Inc (NASDAQ:NVAX) stock is up 130% to trade at $10.82 today, by far the best stock on the Nasdaq this morning. The drugmaker signed a co-licensing agreement with French pharma giant Sanofi to co-commercialize its Covid vaccine, starting in 2025. Novavax receives $1.2 billion in the deal, which also involves developing treatments for Sanofi's flu vaccine. 

This is poised to be NVAX's largest single-session move on record. The shares fell to a record low of $3.24 on Feb. 5, a far cry from the February 2021 record high all the way up around $330. Today's breakout makes sense considering the deal ensures Novavax will be a consistent biotech sector player for years to come, instead of a flash in the pan during the pandemic.  

A short squeeze could power more gains, considering short interest fell 9% in the most recent reporting period, yet 33% of the stock's total available float is sold short. At NVAX's average pace of trading, it would take over six trading days for shorts to buy back their bearish bets. 

Options traders have been betting bullishly. The equity's 10-day call/put volume ratio of 6.31 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 77% of readings from the past year. This suggests options traders have been more bullish than usual in the last 10 days.

It's more of the same today. In just the first hour of trading, over 43,000 contracts have changed hands, volume that's 39 times the average intraday amount. The May 10 call that expires next Friday is the most popular, with new positions being bought to open there.