Shares of pharmaceutical giant Bristol Myers Squibb (BMY) are up about 10 percent over the past year. One trader is betting that shares will continue higher in the next month.
That’s based on the August $70 calls. With 29 days until expiration, 6,809 contracts traded compared to a prior open interest of 129, for a 53-fold jump in volume on the trade. The buyer of the calls paid $4.23 to make the bet.
Shares recently traded for just over $73, making these options about $3 in-the-money already.
The stock has been somewhat rangebound so far this year after a modest rally last year. Shares are at a multi-month low, and could trend higher from here if the market continues to respond positively to earnings as well.
Action to take: The big pharma company is near a 52-week high of $80 per share, and shares look relatively well valued at just under 10 times forward earnings. It’s also a global leader in its industry, and shares yield 2.9 percent here.
For traders, the calls could offer mid-double-digit gains in the coming weeks before expiration. They’re unlikely to make a huge move, given that they’re already in-the-money, but that also reduces the risk of a total loss on the trade.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.