Short-term options on ALXN, CELG, and REGN are cheap
Biotechs are buzzing today on news of Gilead Sciences' $12 billion buyout of cancer specialist
Kite Pharma Inc (NASDAQ:KITE). While KITE's 28% surge serving as a tailwind for the sector, drug stocks could continue to be in focus next month, considering several pharma names top the list of best stocks to own in the
tough trading month of September. Here's a closer look at
Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN),
Celgene Corporation (NASDAQ:CELG), and
Regeneron Pharmaceuticals Inc (NASDAQ:REGN) ahead of a historically bullish month for the shares.
Alexion Stock Nears Familiar Resistance
Sector tailwinds have ALXN stock up 1.2% today to trade at $139.06. The security has now added more than 44% since hitting a nearly three-year low of $96.18 in late May, but is running into familiar resistance in the $140-$145 region -- a neighborhood that's contained ALXN shares for the past 14 months. If history is any guide, the stock could overtake this area over the next several weeks.
Specifically, according to data from Schaeffer's Quantitative Analyst Chris Prybal, ALXN stock has averaged a 5.7% gain over the past 21 Septembers, ending the month in positive territory 57% of the time. A monthly win of this magnitude would put Alexion shares near $147, territory not charted since early June 2016.
It's a prime time to bet on ALXN's trajectory with options, considering low volatility expectations are being priced into the stock's short-term options -- a potential boon to premium buyers. Not only does Alexion's 30-day at-the-money implied volatility of 28.5% ranks in the 5th annual percentile, its Schaeffer's Volatility Index (SVI) of 27% ranks in the bottom percentile of its 12-month range.
Celgene Shares Bounce From 80-Day Trendline
After hitting a two-year high of $139 on July 27, CELG stock pulled back to its 80-day moving average -- a trendline that, along with its 120-day counterpart, worked as a springboard for the shares after the early November U.S. presidential election. The security bounced from here last week, and is up 2.1% today to trade at $132.34.
More gains could be on the horizon, if history is any guide. Over the past 30 years, Celgene stock has averaged a 5.3% gain in September, and has been positive more than half the time.
Plus, short-term Celgene options are priced at attractive levels, per the equity's SVI of 20% -- in the 18th percentile of its annual range. Likewise, CELG's Schaeffer's Volatility Scorecard (SVS) is docked at 76, suggesting the shares have exceeded options traders' volatility expectations over the past year.
Regeneron Options are Attractive
Regeneron shares are up almost 32% year-to-date, including today's 1.2% pop to hover near $483.30. However, the stock is still staring up at its 60-day moving average -- a trendline that's kept a tight lid on REGN in August, following disappointing sales data for its
eczema drug.
This trendline could be tackled, though, should REGN post another positive September. Over the last 26 years, Regeneron stock has averaged a 4.3% monthly gain, with a 58% win rate.
REGN's short-term options are currently priced at attractive levels, from a volatility standpoint. While the security's SVI of 29% ranks below 93% of all comparable readings taken in the past year, its 30-day ATM IV of 32.8% ranks in the 37th annual percentile.