A “Don’t Blink” Opportunity In Regeneron Pharmaceuticals Inc (REGN)

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The sky is falling yet again on the market. But past the algo-driven excitement and fast-money worry, Regeneron Pharmaceuticals Inc (NASDAQ:REGN) is offering a nice opportunity for bullish investors with an eye on a longer-term rally. Let me explain.

A "Don’t Blink" Opportunity In Regeneron Pharmaceuticals Inc (REGN)

Blame it on the banks or more specifically, blame Thursday’s lunchtime “micro, micro” flash crash on Deutsche Bank AG (USA) (NYSE:DB) and raised “counterparty concerns.” Just don’t blame this strategist if you don’t scoop up REGN stock at an attractive price in the aftermath of, likely blink-and-you-miss it, calamity and mayhem.

Not that I’m disregarding Bloomberg’s breaking report on Deutsche Bank rekindling nightmares of another financial crisis. I’m not, although most financial institutions are in far better shape than in 2009. I simply see a better opportunity in REGN stock by remaining optimistic.

It should also be noted I’m not convinced a Hillary Clinton or Donald Trump (God forbid) presidency won’t result in drug-price hardball and negatively impact REGN stock’s bottom line. It’s all possible and maybe more. But right now REGN stock’s prospects off and on the chart, simply look really favorable.

Led by its flagship, macular degeneration eye drug Eylea, REGN stock has launched a patient trial to determine if its newly marketed cholesterol-fighting drug Praluent might reduce second heart attacks. That could certainly prove a boon for Regeneron shareholders.

Regeneron is also waiting on a late-October review from the Food and Drug Administration regarding the protein sarilumab. The therapy apparently crushed AbbVie Inc’s (NYSE:ABBV) top-selling rheumatoid arthritis treatment Humira in a head-to-head trial and could provide substantial support for REGN stock.

The company also has dupilumab, an allergy drug that’s also under review to consider, bullish full-year reaffirmed growth forecast of 20% to 25%, REGN stock’s prominent position as a proven and profitable ongoing biotech company — and one looking ready to return some value to shareholders on the price chart.

REGN Stock Daily Chart

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Click to Enlarge
Source: Charts by TradingView

The good news, other than positioning with a butterfly at the time, is shares of REGN have actually improved the technical outlook for bullish investors.

A previously discussed failed head-and-shoulders pattern eventually found meaningful support from its 50% retracement level and former neckline resistance. And now, a pullback in REGN is testing moving average support from both the 50- and 200-day simple moving averages, which also recently signaled a bullish golden cross.

Now, net traders are presented an opportunity to buy into the Regeneron story at decent-looking price levels in REGN stock.

REGN Bullish Butterfly

Given what’s been discussed and in reviewing REGN’s options, the Jan $430/$460/$490 call butterfly is attractive.

Priced for around $4 per spread with REGN stock at $406.40, the bullishly positioned butterfly requires a move of just less than 7% at expiration to breakeven. With nearly four months of life in the spread, earnings and FDA catalysts, that’s certainly reasonable.

At the same time a profit of 650%, or $2,600 per spread, is possible if shares of REGN found themselves exactly at $460 on expiration. More pragmatically, a generous profit range from $434 to $496 in REGN stock — and where solid, managed profits can more typically be found during the life of the spread — makes this a butterfly to consider.

Investment accounts under Christopher Tyler’s management do not currently own positions in any of the securities or their derivatives mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT.

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The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.


Article printed from InvestorPlace Media, https://investorplace.com/2016/09/regeneron-pharmaceuticals-regn-stock-nasdaq-options/.

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