Buy to open the January 20, 2017 call on Mylan (MYL) with a strike price of $45 at $1.90 or lower. Symbol (MYL170120C45)

This is a longer term trade based on Mylan’s current valuation. While we may close the position well before the January 2017 expiration, it is not tied to any particular event and does not require immediate action.

Mylan has been battered, properly, over outrage regarding price increases of its EpiPen product. Our analysis shows that EpiPen price increases accounted for just $.17 of Mylan’s $4.30 in earnings last year. The stock trades at 7 times 2017 estimates versus a peer group average of 14. Mylan should grow earnings 16% this year and next.

Mylan has a valuable portfolio of products that are not dependent on price increases for profit improvement. Currently plans are being floated which would move EpiPen to a federal list of preventive medical services, a move that would eliminate the out-of-pocket costs of the product for millions of families. Drugs currently on this list are paid for entirely by the Federal government or insurers which would allow Mylan to reap the higher price while eliminating the burden for patients.

Regardless of the approval of this plan, I expect the focus on Mylan’s stock over the next four months to shift towards its growth prospects and away from Epi-pen pricing.