Options Bulls Take Notice as Bristol-Myers Squibb Co (BMY) Pushes Higher

Bristol-Myers Squibb Co (NYSE:BMY) is making a late-week surge

Sep 18, 2015 at 12:25 PM
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Bristol-Myers Squibb Co (NYSE:BMY) is bucking the broad-market trend lower today -- along with some other drugmakers -- picking up 2.9% to trade at $63.97. As such, bullish options traders are crashing the party. Calls are changing hands at a pace four times the intraday norm, and quadruple that of puts. 

On a closer look, one group of option traders is looking to profit today by buying to open the September 64 call, which expires at the closing bell. This means the traders are betting on BMY to close above $64 today. Another batch of bulls is targeting the weekly 9/25 65-strike call, anticipating the shares will continue their surge through next week. 

Digging even deeper, the top BMY strike is the October 67.50 call, with nearly 3,400 contracts on the tape. A majority of these crossed as a 2,800-contract block, presumably bought to open by a single trader gambling on upside by the close on Friday, Oct. 16, when the soon-to-be front-month options expire.

This call bias is nothing new for BMY speculators. The stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio has jumped from 1.80 to 4.40 during the past two weeks. This reading now outstrips nearly two-thirds of all others from the past year. Put plainly, call buying has been much more popular than normal during the past two weeks. 

Options traders' optimism is shared by the Street. Of the 14 brokerage firms covering BMY, nine say it's a "buy" or better. Plus, the equity's average 12-month price target of $70.39 sits near multi-year-high levels.


Looking at the charts, the security has done well, from a long-term perspective. Even before today's gains, BMY was up 21.7% in the past 12 months, hitting a nearly 15-year high of $70.54 on July 20. However, today's upward move was capped by the stock's 80-day moving average. This trendline, which had previously served as a level of support for Bristol-Myers Squibb Co (NYSE:BMY) through most of 2015, also rejected the stock's breakout attempt in late July. 


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