Increased implied volatility of Akebia Therapeutics (AKBA) stock options

Investors in Akebia Therapeutics, Inc. AKBA should pay close attention to the action based on recent movements in the options market. Indeed, the $ 5.50 call on June 18, 2021 had one of the highest implied volatilities of any stock options to date.

What is implied volatility?

Implied volatility shows the magnitude of movements expected by the market in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks expect significant movement one way or the other. It could also mean that an event is brewing soon and could cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when developing an options trading strategy.

What do analysts think?

Obviously, options traders are planning a big move for Akebia Therapeutics shares, but what is the fundamental image of the company? Currently, Akebia Therapeutics is a Zacks Rank # 3 (Hold) in the Medical – Drugs sector which ranks in the bottom 19% of our Zacks Industry Rankings. In recent weeks, Zacks’ consensus estimate has widened for the current quarter, from a loss of 28 cents per share to a loss of 30 cents.

Considering how analysts are currently feeling about Akebia Therapeutics, this huge implied volatility could mean a trade is growing. Often, options traders look for options with high levels of implied volatility to sell premiums. It is a strategy that many seasoned traders use because it captures the decomposition. Upon expiration, the hope for these traders is that the underlying stock does not move as much as initially expected.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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