At least one trader is betting that pharma giant Bristol Myers-Squibb (BMY) will have a big rally in the first half of 2021. That’s based on the call buying in the June 2021 $72.50 calls. The strike price of the option is about 15 percent higher than where shares currently trade at $62.
Over 2,500 contracts traded against a prior open interest of 263, a nearly 10-fold rise in volume. The buyer of the contracts paid about $1.09 on average.
While BMY has been working on a Covid vaccine, it’s lost out to Moderna and Pfizer in the race so far. But as a giant in the space with a number of drugs under development and review, there’s always a good chance for a rally on positive news there. Add in how shares have been a relative underperformer, and it’s easy to see why shares could move higher in the next seven months.
- This Industry is Exploding Faster Than It Has in 15 Years
1,700 people are moving to Central Florida every week.
And the numbers are only increasing as more and more people are banking the end of the pandemic drawing near.
And one company, which just received critical approval to list on a prestigious public exchange, could be on the verge of going on a huge run.
Action to take: There’s a reasonable value for investors who buy under $62.50, as the pharma giant trades at less than 9 times forward earnings and pays a 2.9 percent dividend yield.
Given the option’s low price in the $1 range, the June calls are also a reasonable bet relative to the risk involved. Traders should look for some kind of news event as a cue for taking profits on the position. While the trade is inexpensive, it’s all time premium, but traders will still have into the spring before that becomes an issue.