DailyPlay – Opening Trade (BMY) – November 20, 2023

BMY Bullish Opening Trade Signal

View BMY Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 32 Contracts Jan 19th $52.5/$55 Call Vertical Spreads @ $0.61 Debit per contract.

Total Risk: This trade has a max risk of $1,952 (32 Contracts x $61) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $61 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that is bearish and expected to bounce higher off support.

1M/6M Trends: Bearish/Bearish

Relative Strength: 2/10

OptionsPlay Score: 130

Stop Loss: @ $0.30 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

After declining nearly 40% over the past 12 months, BMY is starting to approach levels that should interest a long term investor. With declining sales of their generics business having eroded shareholder value, BMY trades at just 7x forward earnings despite stable revenues, EPS and free cash flow. I believe that it warrants this stock warrants further inspection and presents a possible opportunity. BMY have 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 any eye on this 136 year old pharmaceutical company. A simple way to play for a potential bounce is to simply look out to buy the Jan $52.5/$55 Call Vertical @ $0.61 Debit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value to this trade, which is 32 Contracts for a risk of $1,952. We will set a stop loss on the put spread at around 50% of the premium paid @ $0.30 Credit.

BMY – Daily