BMY – Bristol Myers Squibb Co. – Call buying and put selling on the global biopharmaceutical company indicates some options investors are preparing for a rally in the price of the underlying shares. Bullish positioning on the stock today took place after Bristol-Myers Squibb Co. and AstraZeneca PLC stated a late-stage clinical trial showed dapagliflozin, a diabetes drug candidate, was more effective at reducing blood sugar levels than placebo. The biopharmaceutical company’s shares are currently up 0.05% to $25.59 as of 12:35 pm (ET). Optimistic investors shed 1,300 puts at the July $24 strike for an average premium of $0.17 apiece, and also sold 4,200 puts at the higher July $25 strike to pocket an average premium of $0.40 per contract. Put sellers keep the premium received as long as BMY’s shares exceed the strike prices detailed above through expiration day in July. BMY-bulls expecting shares to rally significantly by September expiration picked up out-of-the-money call options. Traders purchased 1,300 calls at the September $26 strike for an average premium of $0.81 each. Shares must increase another 4.75% to surpass the average breakeven price of $26.81 in order for September $26 strike call buyers to start to make money. Bullish sentiment spread to the higher September $28 strike where roughly 3,100 calls were purchased at an average premium of $0.23 apiece. Investors long the higher-strike calls profit only if BMY’s shares surge 10.3%, shatter the current 52-week high of $27.07 on the stock, and trade above the average breakeven price of $28.23 by September expiration.
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Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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