Short-Term Buying Opportunity in CELG

06/08/2010 12:01 am EST


Jocelynn Drake

Financial Analyst, Schaeffer's Investment Research

Celgene Corp. (CELG) jumped more than 4% yesterday morning after the company released positive research from late-stage studies on its Revlimid treatment for lymphoma and multiple myeloma, a cancer of the bone marrow. As a result, an analyst at Jefferies upgraded the shares from "hold" to "buy."

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Ahead of the company's earnings report, Wall Street was optimistic toward the shares. According to Zacks, the stock had earned 17 "buy" ratings, two "holds," and one "sell." There isn't much room left for additional upgrades following the news. However, the various Wall Street analysts could reiterate their positive outlooks.

Meanwhile, options players are relatively optimistic toward the shares. The International Securities Exchange (ISE) has reported 2.3 calls purchased to open for every one put purchased to open during the past two weeks. This ratio of calls to puts is higher than 64% of all those taken during the past year.

Furthermore, the Schaeffer's put/call open interest ratio for CELG comes in at 0.84, which is lower than 56% of all those taken during the past year, pointing to a slight bullish bias among short-term options players.

Technically speaking, the stock is eating away at its year-to-date loss of 7.4% this morning. The equity jumped above resistance at its ten-day moving average, but it is still facing resistance at its declining 20-day trend line.

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By Jocelynn Drake, contributor, Schaeffer’s Trading Floor Blog

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