Unusual Volume in Edwards Lifesciences Put Options Shows Investors Bullish on EW Stock

An unusually high volume of out-of-the-money (OTM) put options in Edwards Lifesciences (EW), which makes heart valve replacement products, shows investors are bullish on EW stock over the next three months. Moreover, EW is below analysts' price targets.

EW is up slightly at $90.78 in midday trading today. It has rebounded significantly since bottoming out right after its July 23 Q2 earnings release. EW hit a recent low of $82.63 on July 24.

This may have been a familiar case of “sell on the news.” In fact, Edwards Lifesciences produced strong earnings, and management raised its earnings per share (EPS) guidance for 2026. 

In fact, EW is still trading well below its average forward price/earnings ratio (see below). That makes today's unusual OTM put volume a signal that investors are likely bullish on EW.

Unusual Put Options Volume

This can be seen in today's Barchart Unusual Stock Options Activity Report. Puts expiring in 81 days on Nov. 20 have been traded in over 25 times the volume of the prior number of contracts outstanding.

There have been almost 2,700 put contracts traded at the $77.50 put strike price, which is almost 15% below today's price (i.e., -14.6% out-of-the-money). Moreover, the premium is still high at 90 cents despite that low strike and extended time period.

That means that an investor(s) who shorted these puts, after posting $7,750 in collateral per contract, immediately receives $90. This works out to a 1.16% yield for the next three months.

More importantly, the breakeven potential buy-in point is $76.60 (i.e., 15.6% lower than today's price). But that only occurs if EW stock drops to $77.50 on or before Nov. 20.

This is even lower than EW's low point on July 24. The point is that this is a very conservative way for an investor to set a value buy-in point and get paid while waiting.

Often, when this occurs, it's a sign that an existing investor is looking to lower their average cost and still make income on their existing holdings.

They may believe that EW stock could be undervalued here. Here's why.

Higher EW Price Targets

Edwards Lifesciences' Q2 revenue was up 13.6% YoY. That was higher than analysts' expectations, according to Seeking Alpha. Moreover, the company posted adj. EPS of 78 cents, up 16.4% from last year's adj. EPS of 67 cents.

In addition, the company raised its revenue guidance and reaffirmed its 2026 EPS guidance to be in the range of $2.95 to $3.05. That's up 17.2% over last year's EPS of $2.56.

More importantly, analysts are now projecting 2027 EPS of $3.38 per share. (This implies next 12-month, or NTM, earnings per share of $3.19, or +6.33% higher).

That means, on a NTM basis, the stock is trading for just 28.5 times forward earnings:

  $90.78 price / $3.19 = 28.5x

That's well below its historical average. For example, Seeking Alpha shows that its 5-year forward P/E multiple has been 33.35x.

This implies EW stock is worth $106.39 per share (i.e., $3.19 EPS x 33.35). That's 17% higher than today.

That's also close to Yahoo! Finance's analyst survey average price target (PT): $100.96. Similarly, Barchart's mean survey PT is $102.03. Moreover, AnaChart reports that the average of 20 analysts is $100.00 per share.

So, given this potential upside in EW stock, along with management's earnings forecasts, investors who are shorting these puts are bullish on EW stock.