DailyPlay – Opening Trade (BMY) – November 27, 2023

BMY Bullish Opening Trade Signal

View BMY Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 15 Contracts Jan 19th $50/$55 Call Vertical Spreads @ $1.32 Debit per contract.

Total Risk: This trade has a max risk of $1,980 (15 Contracts x $132) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $132 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bullish trade on a stock that is bullish but expected to pull back to lower levels.

1M/6M Trends: Bearish/Bearish

Relative Strength: 2/10

OptionsPlay Score: 118

Stop Loss: @ $0.66 Credit. (50% loss on premium paid)

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that these prices are based on Friday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

Investment Rationale

BMY has recently acquired multiple pharmaceutical companies with some starting to pay off with an FDA approval just this week for their lung cancer drug Augtyro. Additionally, multiple drugs in their pipeline that have been approved this past year are starting to see stellar QoQ sales growth. So, as analysts turn sour on BMY, I believe now is the best time to have an eye on this 136-year-old pharmaceutical company. The share price for BMY has now stabilized after this FDA announcement and we therefore believe that it is now a good time to enter this trade.

A simple way to play for a potential bounce is to simply look out to Buy the Jan 19th $50/55 Call Vertical @ $1.32 Debit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this trade, which is 15 Contracts for a risk of $1,980. We will set a stop loss on the put spread at around 50% of the premium paid @ $0.66 Credit.

BMY – Daily