Buy Amgen October 21 Call Option

By Joe Duarte • September 23, 2016

I expect shares of Amgen (NSDQ: AMGN), the world’s largest biotech company, to rise above $180 in the next few weeks based on a reliable seasonal pattern. The stock tends to rise in price during the month prior to the release of its earnings report, which is due out on October 26. The average gain for the stock in the 4-6 week period before the earnings report has been released over the past year has been 13%. If the pattern holds true we could see Amgen rise well above $180 and perhaps $185, which should translate into a sizable gain from this option. I expect this to be a very short-term trade and recommend quick action due to market conditions and the tight buy limit.

Buy Amgen October 21, 2016 175 Call Option (AMGN_102116C175) up to $4.

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Ivan

09/23/16 ‐ 9:53am ET September 23, 2016 at 9:53am ET

Dear
In the AMGN_102116C180 we have 180 while you advise 175 call?

Jack

09/23/16 ‐ 11:12am ET September 23, 2016 at 11:12am ET

I am with Ivan, would like a clarification as to the actual strike price recommended.

Joe Duarte

09/26/16 ‐ 11:42am ET September 26, 2016 at 11:42am ET

Hello Ivan and Jack. Sorry for the confusion. The strike price is 175.

Joe Duarte

Roger Dehring

09/23/16 ‐ 10:52am ET September 23, 2016 at 10:52am ET

Good morning, Joe,

How many years are you looking at to get 13% gains between today and October 26? Looking at Budd’s (OFI) seasonality calculator, I see no up year greater than +6.3% to October 21 expiration and no up year greater than +6.9% the following week (October 28). I know neither of these are to the 26th when they announce, but would think the difference shouldn’t be that great.

But this is only the past ten years which is why I asked how far back you were looking. Otherwise, I like this trade.

Thanks, Roger

Joe Duarte

09/26/16 ‐ 11:36am ET September 26, 2016 at 11:36am ET

Hi Roger:
On a trade like this I look at the past four or five earnings reports. This is because of the changing health care climate and the near term effects on the shares. What happened five or ten years ago may or may not be relevant because of the ongoing effects on health care stocks from the ACA. Note that I stated that time frame specifically in the alert. “The average gain for the stock in the 4-6 week period before the earnings report has been released over the past year has been 13%.” Hope this helps.

Joe Duarte

09/30/16 ‐ 3:50pm ET September 30, 2016 at 3:50pm ET

Tough trade so far, no doubt about it. I own the option. I expect to have more to say about it on Monday’s BTP Weekly update.

Joe Duarte

Guest User

09/29/16 ‐ 3:33pm ET September 29, 2016 at 3:33pm ET

See anything looking different on the Amgen Option?

If not it’s looking like quite a deal right now at 50 cents.

Antony Mathew

10/17/16 ‐ 10:49am ET October 17, 2016 at 10:49am ET

Joe,
Amgen is still going down. You said buy put order expiration date 10/21/16 but the earnings report is releasing on 10/26/16. If 10/26/16 is the earnings report release, buy to open expiration date is 10/21/16, is it a good thing? I am thinking 10/26/16 is earnings report release, so the order expiration date must be after that date, I mean November 2016.
What you think?

Joe Duarte

10/17/16 ‐ 1:53pm ET October 17, 2016 at 1:53pm ET

Hi Anthony:

The option has been rolled over into December. See the October 3rd BTP Weekly report for instructions.

Joe Duarte

Jim Pearce

10/17/16 ‐ 4:37pm ET October 17, 2016 at 4:37pm ET

Here is a link to that article – http://www.investingdaily.com/breakthrough-tech-profits/articles/29032/playing-it-safe-as-the-election-nears/

Joe Duarte

10/18/16 ‐ 1:40pm ET October 18, 2016 at 1:40pm ET

Hi Anthony:

I responded to your query yesterday. See my response in this chain of messages and Jim Pearce’s link to the article where everything is explained.

Joe

Frank Lev

10/21/16 ‐ 2:55pm ET October 21, 2016 at 2:55pm ET

AMGN is below 159.00. My October 175 calls are worthless. Did you say to buy the Nov or Dec 170 calls below 5.00?

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