Bristol-Myers Squibb Stock Hits Annual High, Eyes 5th Straight Monthly Win

It's a good time to target near-term options, too

Oct 13, 2017 at 1:30 PM
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Barclays this morning upped its price target on Bristol-Myers Squibb Co (NYSE:BMY) to $65 from $58, sending the shares to their highest point since their August 2016 bear gap. This comes after Guggenheim yesterday raised its price target to $75. At last check, BMY stock was up 0.4% at $65.60, earlier topping out at $66.10, putting it above a key technical level.

For instance, the security is currently trading above the $64-$65 range, which is not only home to the aforementioned bear gap, but also represents a 61.8% Fibonacci retracement of its 2016 peak and 2017 nadir. Overall, Bristol-Myers Squibb is up nearly 25% during the past six months, and is on pace for its fifth straight monthly win.

bmy stock

Options traders have been unusually bullish during this time, too. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 50-day call/put volume ratio of 3.55, which sits only 1 percentage point from a 12-month high. This means call buying has been much more popular than normal, relative to put buying.

Today, however, puts are outpacing calls 3-to-1, with the contracts trading at nine times the expected pace. Looking at today's top trades, what appear to be identical put spreads featuring 3,500 February 45 puts and 3,500 February 55 puts crossed this morning. The former contracts were likely sold to open and the latter bought to open, meaning this bear is eyeing a move down to the $45 level from BMY stock in the coming months.

Bullish or bearish, it's a good time to target the equity's short-term options. For one, the security has a Schaeffer's Volatility Index (SVI) of 18%, ranking only 6 percentage points from a 12-month low, hinting at low volatility expectations. Plus, a Schaeffer's Volatility Scorecard (SVS) of 93 shows Bristol-Myers Squibb has regularly made bigger move on the charts than options traders have priced in over the past year.

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