Pharma Stock Signal Has Never Been Wrong

BMY options are a bargain at the moment, too

Digital Content Manager
Oct 28, 2020 at 3:01 PM
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The shares of Bristol-Myers Squibb Co (NYSE:BMY) are down 1.7% at $57.73 at last check. And while the pharmaceutical name carries a 10% year-to-date deficit, investors should not turn their backs on BMY just yet. That is because the stock's recent pullback has it near a historically bullish trendline, which could push the security higher in the near future. 

More specifically, BMY just came within one standard deviation of its 320-day moving average, after spending months above this trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, three similar signals have occurred during the past three years. Without fail, the security enjoyed positive returns one month after each signal, averaging a 8.1% gain. From its current perch, a move of similar magnitude would put BMY above the $62 mark -- close to its October peak.

BMY

An unwinding of pessimism in the options pits could create additional tailwinds for the security. This is per the stock's Schaeffer's put/call open interest ratio (SOIR), which stands higher 81% of readings from the past year. In other words, short-term option traders have rarely been more put-biased.

Now seems like the right time to weigh in of BMY options. The security's Schaeffer's Volatility Index (SVI) of 34%, which sits in the low 24th percentile of all other annual readings, meaning the stock sports attractively priced premiums at the moment.

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