Unusual Options Activity: Gilead Sciences (GILD)

Shares of biotech firm Gilead Sciences (GILD) have been trending slightly higher in the past year. One trader sees the opportunity for shares to move higher in the months ahead.

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  • That’s based on the June $75 calls. With 268 days until expiration, over 30,430 contacts traded against ta prior open interest of 1,121, for a 29-fold jump in volume. The buyer of the calls paid $4.80 to make the trade.

    Shares of the biotech recently traded around $71, so they would need to rally just over 5 percent for the trade to move in-the-money before expiration.

    While shares have been trending higher, there’s a longer-term range to shares that suggests the price may move into the $80 range before reaching their peak. The past year has only seen a share price high of $73.

    Action to take: Investors may like shares here, as they trade at under 18 times earnings, and yield nearly 4 percent at current prices.

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  • Traders may like the June calls. They carry a low price, and have ample time to play out. Traders should look to take profits if shares get into the low $80 range near their multi-year highs. If that happens in the next few months, returns would likely be in the high double-digit range. Given the recent market volatility, traders may want to start building a stake now, but look to buy more contracts on a down day for shares.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.