Options Check-Up: Bristol-Myers Squibb, Merck & Co., and Novartis AG

Analyzing recent option activity on Bristol-Myers Squibb Co (BMY), Merck & Co., Inc. (MRK), and Novartis AG (ADR) (NVS)

Jan 23, 2015 at 8:11 AM
facebook X logo linkedin


Among the stocks attracting attention from options traders lately are pharmaceutical firms Bristol-Myers Squibb Co (NYSE:BMY), Merck & Co., Inc. (NYSE:MRK), and Novartis AG (ADR) (NYSE:NVS). Below, we'll break down how option buyers are positioning themselves, and how much speculators are willing to pay for their bets on BMY, MRK, and NVS.

  • Shares of BMY have been on the rise, adding 15% year-over-year to perch at $62.09. The security has also notched a 5.2% gain year-to-date. Accordingly, sentiment in the options pits is bullish ahead of the company's scheduled earnings report Tuesday, Jan. 27 -- Bristol-Myers Squibb Co's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 5.32 sits just 8 percentage points away from an annual optimistic peak. However, 47% of covering analysts rate the stock a "hold" or worse, and a round of post-earnings upgrades could provide tailwinds for BMY. Short-term options for the security are fairly priced, historically speaking, per its Schaeffer's Volatility Index (SVI) of 23%, which is in the 42nd percentile of all similar readings taken over the past year.

  • Sector peer MRK is also trending higher, gaining 21.3% year-over-year to hit $62.59. In fact, the equity notched a fresh 12-year high of $63.62 on Jan. 13. Meanwhile, sentiment in the options pits is heavily skewed toward puts. Merck & Co., Inc.'s 50-day ISE/CBOE/PHLX put/call volume ratio of 0.73 is in the 99th annual percentile. Much like BMY, near-term options for MRK are pricing in middle-of-the-road volatility expectations, with its SVI of 21% ranking in the even 50th percentile of its annual range.

  • NVS is outperforming as well, adding 18.4% year-over-year to reach $96.84. Activity in the options pits is tilted toward puts ahead of its Jan. 27 earnings report; Novartis AG (ADR)'s 10-day ISE/CBOE/PHLX put/call volume ratio of 0.68 ranks in the 65th percentile of all similar readings taken annually. Short-term options for NVS are slightly more expensive than usual, per its SVI of 19%, which is in the 65th percentile of its annual range.
 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI