Trading the news on GlaxoSmithKline

March 5, 2008 by Daniel Beatty

Our friends at Market Intelligence Center have an opinion on GlaxoSmithKline after the news that the Food & Drug Administration requested more information from the company about its asthma drugs.

Technically the stock is bearish and with this news it is primed for a bear call credit spread. Market Intelligence Center is suggesting an August Bear-Call credit spread above the $50. For more details on this check out their post - GlaxoSmithKline (GSK) NewsBite - FDA Requests Data on GlaxoSmithKline Asthma Drugs

This in my opinion is the correct way to trade on the news - using the news to confirm a position is going in the direction you believe the stock is going. However, trading the news such as bad news on a high flying stock can make a good amount of money but it is much more speculative and can really hurt if it goes the wrong way. I much prefer a more conservative approach and using the news to confirm vs speculate is the method I prefer.