DailyPlay – Opening Trade (BMY) – March 28, 2024

BMY Bullish Opening Trade Signal

Investment Rationale

We are reentering a position in BMY after being stopped out a couple of weeks ago from our initial bullish position. Our technical and fundamental thesis has not changed, we simply were a little too early. This also is a teaching moment for traders who have ever been stopped out of a trade, and become gun shy about getting back in after feeling burned, only to see the stock eventually turn in their expected direction. Stop losses are a form of discipline that we cannot violate, and sometimes we may need a second and potentially even a third try to eventually catch a stock near it’s bottom or top. 

Technical Analysis

After bottoming over the past 6 months, BMY broke out above its $53 resistance level, only to see it fail a few days later. Since then, it has held its $51.50 support level and formed a higher low and breaking out above $53 again. We’re going to re-establish a long position on this new breakout with an initial upside target of $59.

BMY – Daily

Fundamental Analysis

BMY trades at only 7.5x forward earnings despite flat EPS, Revenue and FCF. This is a significant discount to the market that warrants further research given the outlook for its drug pipeline. BMY have acquired multiple pharmaceutical companies with some starting to pay off with an FDA approval for their lung cancer drug Augtyro. Additionally, multiple drugs in their pipeline that have been approved this past year are starting to see strong QoQ sales growth. So, with analysts sour on BMY, I believe now is the best time to have any eye on this 136 year old pharmaceutical company.

Trade Details

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish Debit Spread

Details: Buy to Open 12 Contracts May 17th $52.50/$57.50 Call Vertical Spreads @ $1.75 Debit.

Total Risk: This trade has a max risk of $2,100 (12 Contracts x $175) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $175 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bullish trade on a stock that recently broke higher off a level of support.

1M/6M Trends: Bullish/ Mildly Bullish

Relative Strength: 3/10

OptionsPlay Score: 120

Stop Loss: @ $0.88 Credit. (50% loss of premium paid)

View BMY Trade

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 Wednesday’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. 

View BMY Trade