Extreme Trade Opportunities for the Week of February 18, 2019February 19, 2019
One of my favorite recession-proof sectors if biotech.
Not only are we likely to see further M&A activity, but new innovation and sizable demand for better treatments continues to fuel a multi-year boom that’s not likely to end soon. Here are three of my favorite ways to trade the sector right now.
Opportunity No. 1 — AbbVie Inc. (ABBV)
At the moment, investors are concerned about what will happen to the company when its top-selling drug, Humira faces biosimilar competition. However, there’s not much to fear at the moment, considering Humira won’t be threatened by biosimilars until 2023. Plus, Humira will likely remain one of the top-selling drugs through that time. As the stock begins to recover, there are a few ways to trade it. All should work out well, we believe. One way is to buy the ABBV stock at market prices. Or, if you prefer options, we’re recommending the ABBV April 18, 2019 80 and 82.50 calls at market prices, as well. We’d like to see at least a 50% return on the calls.
Opportunity No. 2 — Johnson & Johnson (JNJ)
As the stock slowly recovers from recent lows, we’d like to see it refill its bearish gap around $148 over the next few months. Two simple ways to take advantage of its recovery include buying shares of JNJ and/or buying to open the JNJ April 18, 2019 135 and 140 calls. We’d like to see all of the call options listed above return at least 50% to 60%, near-term.
Opportunity No. 3 — Amgen (AMGN)
After a sizable pullback, it’s now just starting to recover. It’s bouncing off its lower Bollinger Band (2,20), and from oversold conditions on Williams’ %R. From a current price of $190.76, we expect to see a test of double top resistance around $205, near-term. There are two ways to trade AMGN. One is to buy the stock at current market prices on Thursday morning. The other is to buy call options, such as the AMGN March 15, 2019 195 and 200 calls. In fact, we’re recommending that you buy to open both for a potential return of 50% each.