Bristol-Myers Squibb Company (BMY) Option Bulls Buoyed By Deal-Making

Bristol-Myers Squibb Co (BMY) will sell the rights to its cancer drug to Eli Lilly and Co (LLY)

by Karee Venema

Published on Apr 16, 2015 at 2:24 PM
Updated on Jun 24, 2020 at 10:16 AM

Option traders have been initiating long calls over puts at a rapid-fire rate on Bristol-Myers Squibb Co (NYSE:BMY) in recent months. In fact, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), BMY's 50-day call/put volume ratio of 5.03 ranks 1 percentage point from a 52-week peak.

Echoing this call-skewed bias is the security's Schaeffer's put/call open interest ratio (SOIR) of 0.41, which rests lower than 85% of all similar readings taken in the past year. Simply stated, short-term speculators have been more call-heavy toward BMY just 15% of the time during the last 12 months.

In today's session, calls are trading at 1.2 times what's typically seen at this point in the day, and are outpacing puts by an 8-to-1 ratio. Per the equity's 30-day at-the-money implied volatility -- which is up 3.8% at 24.4% -- short-term contracts are seeing increased attention. Drilling down, the ISE has confirmed buy-to-open activity at BMY's weekly 4/24 64-strike call, meaning speculators are betting on a breakout above $64 by next Friday's close, when the series expires.

On the charts, Bristol-Myers Squibb Co (NYSE:BMY) has been put in a strong performance over the past year, up 28.8% to trade at $63.72. Off the charts, the biopharmaceutical firm has been making a string of deals of late, including today's announcement that it will shift full North American commercialization rights (subscription required) of its cancer drug, Erbitux, to Eli Lilly and Co (NYSE:LLY).


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