Pharma Bears vs Chip Bulls: Options Diverge

The Supreme Court's ruling against Big Pharma's Medicare drug pricing challenge is rattling options markets. Traders rushed to put protection on major drugmakers on Tuesday.

ABBV options show a heavy put skew. Open interest at the $145 put strike for the May 22 expiry tops 163 contracts. The $155 put strike carries 288 in open interest. These near-dated puts suggest traders are bracing for near-term weakness after the court ruling. BMY, PFE, and JNJ also show multiple active put strikes through the June expiry cycle.

LLY has near-term expiries running through May 22 and out to August. Its options chain remains active despite the ruling's lesser direct impact on its GLP-1 drugs.

Semis tell a very different story. MU leads all large-caps in negative bets by volume over 7 days. Yet the broader semiconductor rally is drawing bullish flows too. NVDA and AMD rank near the top for raw options bets. TSLA also sits high in that list.

On the positive side, PLD (Prologis) and ICE both show 100% positive options flow over the last 7 days. That suggests clean call-side positioning from institutional players.

Biotech CYTK carries the highest options score among mid-caps. Its short score of 59 and 38% analyst upside makes it a crowded two-way trade. Expiries run from June 5 through August.

GME remains in the mix with weekly expiries every Friday through June. With a short score of 77 and a 17.9 days-to-cover reading, speculative options flows here stay elevated.

The clearest macro signal today: pharma puts vs semiconductor calls. That divide is likely to widen as more details emerge from the court ruling.

This is not financial advice.