Amgen Inc. (AMGN) is a biotechnology company engaged in discovering, developing, manufacturing and delivering human therapeutics to pharmaceutical wholesale distributors in the United States and Europe. The stock is currently trading around $171.17 at the upper end of its 52 week range of $124.76-$174.80. The stock has been out performing the market this year rallying 6.61% year to date. AMGN is scheduled to report earnings after the closing bell today, and the stock is down $0.30 or 0.17% on the session ahead of the close.
Over the past 12 quarters AMGN has rallied on earnings day 6 times with an average move of 3.38%. The stock appears to make no stable trend on a chart going into the release having broken through the upside of the Ichimoku Cloud in late July on the daily bars. Over the past 12 quarters AMGN has rallied on earnings day to expiration 7 times with an average move of 4.01%. Investors are hoping for another surprise since the average earnings surprise over the last four quarters is 13.98% as well as increasing sales due to orders from major institutions. With the stock trading way above the cloud, good earnings history and strong sales support it is hard to justify anything but a long position in AMGN.
The options market is currently implying a move of around $6.37 or 3.7% in AMGN by this Friday’s close giving us targets of $164.80 and $177.54.
Trade: Buy this week’s 175-177.5 Vertical call spread for $0.62
Risk: $62 per lot
Reward: $1.88 per lot
Break Even: $175.62