Amgen (AMGN, $58.74, up $0.71) continued its winning streak on Monday as the stock made it eight-in-a-row. Shares are benefiting from takeover speculation and that has fueled Amgen’s recent run towards $60.
The March 60 calls (YAACL, $2.20, up $0.35) were recommended on February 3 at $1.20 and are now up over 80%. I had mentioned in the Weekly Wrap that we could have set a stop of $1.80 but it would have given us no room to work with in case we started Monday off lower.
The call options didn’t dip that low as Amgen traded in positive territory for most of the day. The March 60’s traded as low as $1.85 so we can now put the $1.80 stop in place. That stop is exactly at a 50% return.
The call options still have about 6 weeks left and hopefully I didn’t jinx us by mentioning how many up days the stock has had. Either way, this trade has been a slow winner for us with now worries. The steady climb has put money in our pocket without causing any stress.
Amgen could have trouble clearing $59.50 and if the stock is turned away at this key resistance level then it could slowly fade from there. However, if we get a push through $60, there is a little resistance at $61 but that could clear the way to $65 if we can get through those levels.
If the stock can make it to $65 by March 20, then the March 60 calls would be worth at least $5 or another double from current levels. Let’s see how Amgen reacts over the next few days before getting too excited though. There is a reason why they call it “resistance” and if Amgen cannot get through these levels, we could have to settle for lesser profits.