GlaxoSmithKline plc (GSK) Traders Respond to Ebola News

GlaxoSmithKline plc's (ADR) (GSK) Ebola vaccine will be tested in Liberia

Digital Content Group

Jan 23, 2015 at 11:50 AM

GlaxoSmithKline plc (ADR) (NYSE:GSK) is 0.4% higher at $45.15, following news that clinical trials of the company's Ebola vaccine will begin shortly in Liberia. Also propping up the shares are a pair of price-target boosts from Leerink (to 1,535P) and Berenberg (to 1,620P). Amid these developments, call volume has picked up, compared to the intraday norm, echoing the growing appetite for bullish bets.

Digging deeper, GSK's two most active strikes are the February 46 and May 45 calls. Based on data from Trade-Alert, it appears some of these contracts are being bought to open, in the expectation that the stock will close atop the strikes at the respective expiration dates.

Today's activity reflects a recent call-buying trend in GSK's options pits. During the last 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), more than 15 calls have been bought to open for every put. The resultant call/put volume ratio of 15.09 outranks 91% of similar readings taken in the previous year.

Technically speaking, while some of its sector peers are flirting with new highs, GlaxoSmithKline plc (ADR) (NYSE:GSK) is trying to come back after bottoming at a multi-year low of $41.25 on Jan. 6. On an annual basis, the stock has stumbled 15.3%, and is currently testing resistance at its 100-day moving average.

Daily Chart of GSK since May 2014 with 100-Day Moving Average

Follow @Schaeffers

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released!