Pharma Stock Sinks After Pulling Lung Cancer Treatment

BMY calls have been all the rage lately

Managing Editor
Jan 24, 2019 at 9:24 AM
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The shares of Bristol-Myers Squibb Co (NYSE:BMY) are down 3% in electronic trading, after the pharma name pulled the U.S application for its combo lung cancer treatment of Opdivo and Yervoy. This comes as the company has struggled to keep up with sector peer Merck (MRK) and its rival cancer drug Keytruda. What's more, the news is overshadowing the company's fourth-quarter earnings beat. 

Thanks to its deal with Celgene (CELG) earlier this month, BMY fell flat on its face to start 2019, down to a five-year low of $44.40 on Jan. 3. Since then, the shares have fought to fill that bear gap, but remain stymied by their 40-day moving average. Year-over-year, the stock has shed 21% going into today. 

The sentiment around BMY is rather tepid. Exactly 70% of brokerages covering the stock rate it a "hold," while 30% rate it a "strong buy."

However, options traders have been leaning bullishly in recent weeks. This is per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which shows Bristol-Myers Squibb stock with a 10-day call/put volume ratio of 5.50, ranking in the 87th percentile of its annual range. In other words, calls have been purchased over puts at a faster-than-usual clip of late.

Echoing that, BMY's Schaeffer's put/call open interest ratio (SOIR) of 0.37 sits in the low 3rd percentile of its annual range. This indicates that short-term option players have rarely been more call-heavy in the past 12 months.

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