Buy Squibb (BMY) Options Says Goldman (GS)

Saying the approval for a melanoma treatment may push the share price of Bristol-Myers Squibb Co. (NYSE:BMY) up, Goldman Sachs (NYSE:GS) said it's time to buy the company.

Goldman equity derivatives strategist John Marshall said, “Bristol-Myers remains the most (in fact, only) compelling new product story in the pharma sector, with significant room for consensus upside earnings-per-share revisions. Given our expectation for higher volatility than normal over the next month, we believe options prices are attractive.”

Marshall recommends traders to acquire April $26 calls because 30-day implied volatility, the key gauge of option prices, is now low and below three-month implied volatility.

If its ipilimumab treatment for melanoma is approved in March, it would be the first treatment approved melanoma in over a decade. Estimates are it would drive up to $1 billion in sales within five years.

Assuming they get approved, calls would more than double if the stock were to increase by $1.50 by the end of March, according to Marshall.