Bristol-Myers bulls looking for rally

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Bristol-Myers Squibb has been grinding slowly higher, and now the bulls are looking for a blastoff.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 5,000 January 52.50 calls for $1.79. Equal numbers of contracts were sold in the January 46 puts for $1.23 and 5,000 January 60 calls for $0.30, resulting in an overall net cost of $0.26.

The trade is bullish, with the potential to inflate to a value of $7.50 if the drug maker closes at $60 or higher by early next year. The investor is also on the hook to buy shares for $46 if they go under that level--a risk that he or she may be willing to accept because that's roughly where the stock bounced in June. (See our Education section for more on the three-way trade, which sells puts to offset the cost of a bullish call spread .)

BMY was up 0.04 percent to $50.55 yesterday. It gapped lower on a big analyst downgrade in May but jumped with positive drug data in late June, and the company reported strong quarterly results one month later. Shares have been pushing against resistance at their 200-day moving average more recently, which could make chart watchers expect a big move if it breaks.

The next potential catalyst could come as early as Monday, when management is scheduled to appear at the Morgan Stanley 2014 Global Health Care Conference.

Total option volume in BMY yesterday was 5 times greater than its daily average for the last month.



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

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: BMY

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