Previous signals have preceded big short-term gains for the shares
The shares of drugmaker Immunomedics, Inc. (NASDAQ:IMMU) have been virtually unstoppable lately, pacing for a fourth straight weekly gain and fresh off a 16-year high. What's more, IMMU is one of the few stocks currently trading near new highs while simultaneously sporting attractive short-term option premiums -- even with earnings around the corner -- and previous signals of this kind have preceded big-time rallies for Immunomedics shares.
IMMU stock was last seen 1.6% higher to trade at $19.37, and earlier today notched a 16-year peak of $19.64. The security has already added 14.4% so far this week, after scoring a massive April gain of almost 25%. In fact, since skimming the $2 level in late 2016, the shares of IMMU have rallied about 900% atop support from their 32-week moving average.
Meanwhile, the stock sports a Schaeffer's Volatility Index (SVI) of 81.6% -- higher than just 17.7% of all other readings from the past year. This indicates that Immunomedics' short-term options are pricing in relatively low volatility expectations right now -- a boon for would-be premium buyers.
Since 2008, there have been five other times where IMMU stock was trading near new highs and had an SVI in the bottom 20% of its annual range. The shares were higher one month later four of those times, with the biotech averaging a gain of 13.98%, according to Schaeffer's Senior Quantitative Analyst Rocky White. A similar surge from current levels would put IMMU around $22.08 -- deeper into decade-plus-high territory.
What's more, a short squeeze could propel the pharma stock even higher. Short interest represents more than a quarter of IMMU's total available float, equating to more than three weeks' worth of pent-up buying demand, at the security's average pace of trading.
As alluded to earlier, Immunomedics is slated to report earnings after the close on Tuesday, May 9. Traders looking to take advantage of relatively cheap near-term call options should note that IMMU stock moved higher the day after reporting following four of its last five reports.