It is another beautiful Monday and I am excited about the possibilities that options trading hold this week. We will start our options trading activities this week from the healthcare sector as we explore the options of Novartis AG (ADR) (NYSE:NVS).
Novartis with its market capitalization of $265.90B provides healthcare solutions. The Company is a multinational group of companies specializing in the research, development, manufacturing and marketing of a range of healthcare products led by pharmaceuticals. Its portfolio includes medicines, eye care, cost-saving generic pharmaceuticals, preventive vaccines, diagnostic tools, and over-the-counter products.
1. Vibrant Product Pipeline
The key reason I am looking at Novartis today is the company’s impressively vibrant product pipeline, which is generating much goodwill for the stock among investors.
The airwaves are filled today with news that the U.S. Food and Drug Administration approved Bexsero, a vaccine from Novartis to prevent invasive meningococcal disease. It was reported that the FDA has granted accelerated approval of Bexsero for active immunization to prevent invasive meningococcal disease caused by serogroup B (also known as meningitis B) in adolescents and young adults from 10 years through 25 years of age.
It is expected that the global market for meningitis vaccines is set to triple to $3.6B by 2020; hence, we can expect Novartis to take a significant market share of the meningitis immunization market with Bexsero.
Just last week, the FDA approved another drug from Novartis, Cosentyx, as a as a first-line systematic treatment for moderate-to-severe plaque psoriasis in adults. The approval is in line with the unanimous recommendation by the Dermatologic and Ophthalmic Drugs Advisory Committee in October last year.
It might interest you to know that Psoriasis is an autoimmune derma disease that causes skin inflammation, which results in severe itching and scaling of the skin. About 125 million people are suffering from Psoriasis worldwide and about 7.5 million people are suffering from the disease in the United States.
In another development, the European Commission has approved Novartis’ Cosentyx to be the first-line treatment of moderate-to-severe plaque psoriasis in adults requiring systemic therapy. Interestingly, Cosentyx appears to be the only drug approved for Psoriasis in Europe; hence, we can reasonably expect the Novartis to record impressive sales for the drug in Europe.
2. Impressive Stock Performance
Another reason to be optimistic about Novartis’ prospects is the impressively bullish stock chart that it holds. The chart above shows how the shares of Novartis have traded within the last one year. You will observe that the stock has been obstinately bullish in the last one year as shown by the bullish trend line (Green).
Interestingly, the stock trades at a 24.53% premium to its 52-Week low of $77.90 and it trades at a 5.75% discount to its 52-Week high of $102.59; hence, the stock has a better chance to soaring to touch the 52-week high than dropping near the 52-week lows. You will also notice that the stock trades at a 2.05% premium to its 50-day moving average and at a 6.68% premium to its 200-day moving average; an RSI of 53.99 suggests that the buying action on the stock is still young.
How to Trade NVS Options
I am positive that Novartis is on track to deliver an impressive earnings result when it releases Q1 2015 results in April 23; therefore, I recommend that you buy NVS call options. I am getting into long positions with the NVS Apr 2015 100.000 call (NVS150417C00100000) and I think you should buy the contract at an asking price of $1.50.
— Daily Option Alerts