A promising straddle
Dear Steemers!
I have an idea for a straddle that I placed in my own brokerage account today.
BMY, Bristol-Meyers Squibb, has been forming a contracting wedge, or symmetrical triangle going back to mid-February, with the apex right at $55. This kind of pattern usually precedes a big move, either up or down. Since we don't know which way it'll go, a straddle is a good play. Further, the Bollinger Band width is currently near an extreme low, meaning a period of volatility expansion is likely.
The included chart is courtesy of stockcharts.com.
The options are, according to Schaeffer's Investment Research, as cheap as they've been in the last year. They say that "options are inexpensively priced in comparison with the probability of a substantial move in the shares, suggesting an opportune time to buy premium."
A near-term catalyst is the Planisware's 2017 User Summit May 17-18, at which BMY will present ("From Idea to Execution"). I will quote the conference program below.
Purchasing a May 26 straddle at the 55-strike point cost $1.41 ($141), plus a $2.18 commission (Interactive Brokers). The break-even points are $53.59 on the lower end and $56.41 on the upper end (discounting commissions). I like this option, since it goes 14 days out and the necessary move is quite small, given the set-up.
Happy trading!
From Mwána Comète
"In mid-April of 2016 the World Wide Health Economics and Outcomes Research (WWHEOR) group within Bristol-Myers Squibb was poised to plan for the 2017 clinical trials budget. Historically, this group had used a shared Excel file to collect and triage the study ideas. With this process they had struggled with version control, data integrity and lacked traceability of the selected study ideas.
The Planisware capability team presented an option to leverage the Ideation module as a tool to support the collection and evaluation of the 2017 study ideas, and once triaged to have them seamlessly integrated in to the planning module for execution. The goal was to have the selected ideas inserted into the Planisware project schedules with 100% data accuracy by the end of May 2016.
This presentation will cover how the Planisware solution streamlined the budget preparation process while saving time, improving data integrity, and providing traceability from idea creation to assigned protocol number.
Presented by: Alexander Rucci (Business Capability Analyst, R&D Strategy and Planning), Melquiades (Mel) de Jesus (Director, Business Capabilities, R&D Strategy & Planning)" [source: https://www.planisware.com/plus2017-philly-day-2]
From 24/7 Wall Street:
"Bristol-Myers Squibb -- This top company remains a favorite on Wall Street. Bristol-Myers Squibb Co. (NYSE: BMY) is a global pharmaceutical company focused on discovering, developing, licensing and marketing chemically synthesized drugs or small molecules and biologics in various therapeutic areas, including virology comprising human immunodeficiency virus infection (HIV), oncology, neuroscience, immunoscience and cardiovascular.
The company recently announced that Biogen will pay $300 million upfront to Bristol-Myers to license a palsy drug with a $2 billion market opportunity and the potential to use that to treat Alzheimer’s. The company will pay a total of $410 million in milestone payments and a tiered double-digit royalty to license a drug known only as BMS-986168. The drug just completed Phase 1 testing in progressive supranuclear palsy.
Shareholders receive a 2.83% dividend The JPMorgan price objective for the stock is $66, and the Wall Street consensus target price is $57.18. The shares closed trading on Thursday at $55.14 apiece." [source: http://wp.me/pmRYt-1E1e]
From the looks of the chart on my TOS platform, I agree this could go either way. But there isn't a bollinger band in the MACD two lines study that you are referring to. Those are the fast and slow MAs. Fast is set to 9 bars and slow is set to 26 bars. Other than that, looks good. Oh if you wanna find explosive moves line up, apply the keltner channel and the bollinger bands to your study, remove the midline of the BB only, make sure the colors of the top and lower bands are equal for the BB and the KC all three bands the same color but different from the BB. When the BB is inside the KC and looks pretty squeezed together, THAT is when you can expect a really good move. GLTY have an awesome wknd!!!
Hmm. Thans for pointing that out. I'll have to redraw the chart to include the BB.
I sometimes use the KCs with exactly that relationship to the BB you mention -- I think I learned it from the guys at Simpler Options.
No worries. If you ever have questions feel free. I love to chart and do TA. If you like, you can check out my first screencast using silver futs as a reference. Have a GR8t WKND :)
Awesome! I'll look for it! You, too!