This morning, I’m recommending a bullish call option on Aimmune Therapeutics, Inc. (NASDAQ:AIMT), the biopharmaceutical company.
My indicators are giving bullish readings this week, a slight upgrade from last week’s mildly bullish readings. However, the S&P 500 benchmark index remains stuck in its four-month-long trading range, so caution is still warranted.
U.S.-China trade and Brexit are still hanging over the market, and that’s one reason I’m recommending a stock that is relatively unaffected by those issues.
Biotechnology Pushing Higher
Earlier this week, Biogen, Inc. (NASDAQ:BIIB) announced earnings, but the real news was its decision to revive its Alzheimer’s treatment drug aducanumab. The drug’s development ceased when the company determined two clinical trials were likely to fail. But after reviewing some of the data, it decided to revive the project.
Any successful Alzheimer’s treatment would serve millions of affected individuals, making it a worthwhile pursuit. And the news sent BIIB above $300 per share briefly. But moreover, it pushed the entire biotechnology sector higher.
Daily Chart of iShares Nasdaq Biotechnology ETF (IBB) versus Biogen, Inc. (BIIB) — Chart Source: TradingView
In the chart above, you can see that when BIIB (orange line) spiked this week, there was a substantial jump in the biotechnology sector, here represented by the iShares Nasdaq Biotechnology ETF (NYSEARCA:IBB).
Traders may start pushing into the sector, looking for companies that could have the next big discovery. We can capitalize on this optimism with a cheap trade on AIMT, which already has a bullish technical picture.
Already Challenging Resistance
As you can see in the chart below, AIMT was already pushing higher before BIIB’s news renewed optimism around biotechnology stocks. In fact, its 50-day moving average (MA) just crossed its 200-day MA. Regular readers will recognize this formation as the “golden cross,” and it can be a sign of future bullishness.
Daily Chart of Aimmune Therapeutics, Inc. (AIMT) — Chart Source: TradingView
AIMT has been rejected at the $27 level before, so it’s possible it will struggle now that it is sitting at resistance. However, I think renewed optimism in the sector will ultimately push the stock higher, and we can profit with a simple long call option.
Buy to open the Aimmune Therapeutics, Inc. (AIMT) Dec. 20th $30 Calls (AIMT191220C00030000) at $1.30 or lower.
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InvestorPlace advisor Ken Trester brings you Power Options Weekly, which delivers 5 new options trades and his latest trading advice to you each Friday. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.