Good morning, Power Profit Traders!
Omicron.
Unless you’ve had your head under a rock (in which case, congratulations), that’s the latest buzzword taking Main Street and Wall Street by storm.
The new Covid variant is partially responsible for the Dow Jones Industrial Average’s (INDU) worst session since October 2020 on Black Friday, with the blue-chip index dropping roughly 900 points — in a holiday-shortened session, no less.
Of course, it wasn’t just stocks that got slammed late last week — so too did many cryptocurrencies. In fact, I just told my Microcurrency Traders to double down on one coin, in particular, after the pullback sent up new buy signals.
I’m once again targeting 100% gains in the coin, so if you’re in the Microcurrency Trader club, you know exactly what I’m talking about. (And if you’re not, this correction is an EXCELLENT opportunity to get in before the next leg higher!)
However, while most stocks fell Friday, there were also a few pockets of strength that popped on the Omicron fears…
And it looks like some traders are expecting even more upside for one vaccine maker… and hoping for an FDA-fueled bounce for another.
So today, I want to dive into some unusual options volume we just witnessed, and then be sure to catch me LIVE at 9:30 a.m. ET TODAY right here, where I could dive into some volume that should be on YOUR radar, according to my proprietary tools…
Omicron Call Volume Surges on 2 Pharma Stocks
Volume is the lifeblood of the market.
It factors into liquidity, and shows you where and how money is moving.
In fact, I have quite a few volume-specific algorithms that I trade around — and my Operation Surge Strike tools even tell me when to get in and out of specific positions based on historical volume and seasonality, among other things.
Call my team at 866-698-4749 to learn more about this strategy
Whether I want to take the pulse of the overall market, or zero in on stocks or sectors attracting unusual attention (perhaps by people who know something), I often like to look at where money is moving in the options world.
That’s why today’s Power Profit Trades Watchlist is brought to you by the Morning Report’s Highest Option Volume tool.
This data is updated after the closing bell each session, and tells us which specific options — not specific stocks — saw the highest daily volume.
You can see that two blue-chip pharma stocks made the list:
Pfizer (PFE) and
Merck (MRK).
While PFE shares gapped to new heights in Friday’s session, bucking the broad-market bloodbath, MRK stock dropped to end the week.
Shares of both drugmakers moved lower on Monday, though, even as Pfizer’s CEO expressed confidence that the company’s Covid-19 pill, Paxlovid, “will not be affected by” the Omicron strain. Pfizer submitted its application for emergency use of the pill with the Food & Drug Administration (FDA) earlier this month.
Merck’s drop may have been due to fears about its own battle with the FDA, as an
advisory committee is expected to convene today to consider the company’s own antiviral pill, molnupiravir.
In any case, it looks like option traders are betting on more upside for both PFE and MRK.
After a volatile session, PFE ended Monday at $52.40. Still, the stock’s $55-strike call expiring Jan. 21, 2022 was on our High Volume list, indicating buyers are expecting Pfizer shares to climb above their recent peak and ascend to new heights above $55 within the next couple of months.
MRK settled Monday at $74.89, erasing October’s gains. Nevertheless, some option traders expect the blue chip to bounce back above $80 soon, as the MRK $80-strike call expiring Jan. 21, 2022 was No. 3 on our Watchlist.
We’ll see how it plays out, but it’s safe to say that while some traders are headed for the hills around Omicron, others are out here taking swings.
That’s all for now, but hop in here at 9:30 a.m. ET today where we could talk even more volume piquing my interest…
See you in there,
Tom Gentile
America’s #1 Pattern Trader
