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Large upside bets in Bristol-Myers

David Russell (david.russell@optionmonster.com)

Pharmaceuticals were strong on Friday, and upside options were really flowing in Bristol-Myers Squibb.

optionMONSTER's Heat Seeker scanning system detected bullish activity at two strikes in particular. Traders started with the shorter-term Weekly 54 calls expiring on Dec. 6, snapping up more than 5,000 contracts in volume well above previous open interest of 1,316. Premiums rose from $0.22 to $0.41, with most of the large blocks pricing for $0.24 to $0.34.

These long calls lock in the price where a stock can be purchased, letting investors profit from a rally while risking only small amounts of capital. Their cheap cost also offers the potential for significant leverage if the drug maker pushes higher. (See our Education section)

About an hour later, buyers turned to the March 52.50 calls, mostly paying $2.92. Some 5,400 changed hands against open interest of 1,047 contracts.

BMY ended the session up 2.02 percent to $53.41. The company received a key upgrade from Morgan Stanley on Oct. 28 based on the promise of its cancer treatments. Shares have been consolidating at their highest levels in more than a decade since then.

Total option volume in the name was 4 times greater than average in the session. Overall calls outnumbered puts by almost 5 to 1.

(A version of this post appeared on InsideOptions Pro on Friday.)

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