This is wishing all American options traders a happy Thanksgiving holiday as we celebrate and appreciate all of life’s blessings that we have received this year. While the Turkey is still hot, I think it is expedient that we quickly examine a strong bullish trend in an extraordinary industry in order to hit the ground running once trading resumes after this long weekend.
The biotech industry has never failed to surprise and reward both traders and investors with the high rate of return that it delivers during its bullish cycles. Datastream U.S. Biotech Index reports that the biotech industry reported a 146% return in 1985, a 64% return in 1989, a 104$ return in 1991, an 88% return in 1995, a 75% return in 1998 and a 147% return in 1999.
A Hot Biotech Stock to Consider
A biotech stock that is piping hot in anticipation of a breakout that could reward options trader on call options in Myriad Genetics, Inc. (NASDAQ:MYGN). Myriad Genetics with its market capitalization of 2.42B is a molecular diagnostic company.
The Company is focused on developing and marketing predictive medicine, personalized medicine and prognostic medicine tests. It performs all of its molecular diagnostic testing and analysis in its own reference laboratories. These technologies include the cornerstone technologies of biomarker discovery, high-throughput deoxyribo nucleuc acid (DNA) sequencing, ribo nucleic acid (RNA) expression and multiplex protein analysis.
The Company uses this information to guide the development of new molecular diagnostic tests that are designed to assess an individual’s risk for developing disease later in life (predictive medicine), identify a patient’s likelihood of responding to drug therapy and guide a patient’s dosing to ensure optimal treatment (personalized medicine), or assess a patient’s risk of disease progression and disease recurrence (prognostic medicine).
Why MYGN Is Currently Hot?
The chart above (with my annotations) shows how the shares of Myriad Genetics have traded in the last one year. You will observe that the stock closed at $33.20 per share yesterday after reaching an intraday high of $33.64. Yesterday’s closing price marks a 65.83% premium to the company’s 52-week low of $20.02. In addition, the $33.20 closing price marks a 28.01% discount to the stock’s 52-week trading high of $42.50.
Now to the technical analysis, you will notice that shares of Myriad Genetics started this year with gains straight out of the gate as it soared to new highs in March, and April through May. You will also notice that the stock has been channeling within the last six months without showing any serious attempts to touch the 52-Week high again.
You will also notice that the stock has found support at $32 (Green) since March and the support has held again in the last couple of days. You will also notice that the stock has met with resistance at $40 (Red) within the last six months. The most interesting point to note is the breakout point at $34 (Blue), which has consistently seen the stock rising when breached.
How to Trade MYGN Options
It appears that shares of Myriad Genetics are gearing up to touch and breakout above the $34 resistance and we can expect the stock to rise to $34 and possibly $40 if the bullish rally remains strong. I am bullish on Myriad Genetics and I recommend buying MYGN calls and the MYGN Jan 2015 35.000 call (MYGN150117C00035000) looks attractive at an asking price of $1.05.
— Daily Option Alerts