A flesh-eating parasite known as the New World screwworm has been discovered in livestock in Texas, and traders are buzzing over potential stock market winners.
shares of Zoetis and Elanco Animal Health A sharp rise in Thursday’s trading awoke the usually dormant stock options market with a strong bullish bias.
Zoetis was last up nearly 4%, while Elanco was up 2% in midday trading.
Zoetis Stocks in the Last 5 Business Days
In particular, the trading volume of Zoetis soared. Last year, the company received conditional approval from the U.S. Food and Drug Administration for an injectable product that treats pests and prevents reinfestation. Last month, the FDA extended its support by issuing an emergency use authorization for the over-the-counter drug.
Zoetis’ options trading volume soared to almost 20 times the daily average, with just under 12,000 trades and about 11,000 calls. More than 4,200 calls were bought compared to 1,200 calls sold and fewer than 300 puts bought.
Early trade flow targeted the stock at the $85 level, with some traders buying nearly $700,000 of the 80 calls expiring on July 17 at about $5 each. The bet is that the stock will rise another 5% by mid-July.
“Scab maggots are now infesting tens of thousands of animals across Mexico,” Scott Gottlieb, a senior scientist at the American Enterprise Institute and former FDA Commissioner, said in a text. “If we start to see clusters of cases or we start to see detections in wildlife like white-tailed deer, our chances of being able to stop this at the border diminish rapidly. The greatest vulnerability is over the next 18 to 24 months.”
cattle futures The company has taken the news well so far, up more than 1% during the session, and is up 50% from its late 2024 lows during a multi-year bull market. A parasite outbreak could tighten beef supplies, but the bigger question may be whether the news alone will scare Americans out of drive-thru lanes.
“The most popular commodity in the United States is beef. Americans love fast food, so any issue with the beef supply chain would create some volatility in the market,” said Ben Rand, Nebraska-based broker with Blue Line Futures and regional director of the Federal Crop Agency. “A conditional use drug was just approved. U.S. manufacturers can handle it.”
