As I was using my Power Stocks scanning program to take a look at the market, pharmaceutical stocks caught my attention. Several names in this area had all of the qualities I look for in a call option—the potential for a big move up (volatility) based on technicals and past activity in the stock, and good liquidity. All of these are names you’ll recognize, and for good reason—options which do not have liquidity may trap you into a position, or prevent you from taking a large enough position to make the transaction worthwhile.
I’ll leave it up to you to decide which strike price and month are appropriate for your trading style, but be sure to give yourself enough time to be right. I’ve also included the support and volatility levels my scanner has detected for these stocks. An average volatility is considered to be 20.
- Elan Corp. (ELN) has started its uptrend and is currently over a dollar above its $12 support, and shows above-average volatility rated 27.
- Immunomedics (IMMU) is a small-cap biotech stock with support at $3. It’s been trading around $4 and shows additional upside, with an extremely high volatility level at 56.
- Bristol Myers Squibb (BMY) is well on its way up, at $47.03, and shows volatility about average at 21.
- Merck (MRK) is showing a reestablished buy pattern in which it confirmed its uptrend after a temporary pullback. It has support at $47 and below-average volatility at 17.
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