Do Options Traders Know Something About Allakos (ALLK) Stock We Don't?

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Investors in Allakos Inc. ALLK need to pay close attention to the stock based on moves in the options market lately. That is because the Jan 21, 2022 $60.00 Put 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 Allakos shares, but what is the fundamental picture for the company? Currently, Allakos is a Zacks Rank #3 (Hold) in the Medical – Biomedical and Genetics industry that ranks in the Bottom 40% of our Zacks Industry Rank. Over the last 60 days, no analysts have increased their earnings estimates for the current quarter, while five analysts have revised the estimates downward. The net effect has widened our Zacks Consensus Estimate for the current quarter from a loss of $1.15 per share to a loss of $1.20 in that period.Given the way analysts feel about Allakos right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, 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.Looking to Trade Options?Check out the simple yet high-powered approach that Zacks Executive VP Kevin Matras has used to close recent double and triple-digit winners. In addition to impressive profit potential, these trades can actually reduce your risk.Click to see the trades now >>More Stock News: This Is Bigger than the iPhone!It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don’t buy now, you may kick yourself in 2022.Click here for the 4 trades >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Allakos Inc. (ALLK): Free Stock Analysis Report To read this article on Zacks.com click here.
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