Stocks quoted in this article:
We have previously noted strength in the healthcare and pharmaceutical markets. Here are two more pharmaceutical companies to consider. After trading in contained flat ranges for the last two months both appear to be breaking out of their ranges this week. Today Pfizer (PFE – 45-15/16) reached its highest point since August 13. Its 10-day moving average is about to overtake its 20-day moving average, generally a bullish sign. Eli Lilly (LLY – 96-1/8) broke out two days ago, gapping up at the open and continued on to close strong on heavy volume. LLY's advance has continued now for three days and has tacked on another two percent so far today.
The most significant options activity taking place yesterday was on PFE's December 40 call, where open interest increased from 1,600 to 5,500 contracts. It would appear that most of the 4,062 contracts traded yesterday were newly opened positions. Other December strikes with large open interest include the December 40 put, with 19,600 contracts open, and the December 45 call, with 20,800 contacts open. LLY options are less active, with open interest skewed toward the call side. In the December call series, there are 3,900 contracts open at the 90-strike price, 4,300 at the 95, and 2,400 at the 100. The most action in yesterday's LLY options was the trading of 734 December 100 calls.