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Option Clips: First Solar, Gilead Sciences, and Bank of America

Reviewing notable options activity on First Solar, Inc., Gilead Sciences, Inc., and Bank of America Corp

by 3/21/2014 2:09 PM
Stocks quoted in this article:

Two equities generating buzz on StockTwits today are alternative energy issue First Solar, Inc. (NASDAQ:FSLR) and biopharmaceutical firm Gilead Sciences, Inc. (NASDAQ:GILD). Meanwhile, financial concern Bank of America Corp (NYSE:BAC) has also been active in the options pits. Here's a look at how traders have been aligning their speculative bets today.

  • First Solar, Inc. (NASDAQ:FSLR) is up 4.2% at $73.47, after tagging a two-plus-year high of $73.97 earlier in the session. The security is poised to end the week 36% higher, as investors and analysts continue to applaud the company's upbeat earnings forecast. Likewise, eleventh-hour option bulls are coming out of the woodwork ahead of March options expiration this afternoon. So far today, FSLR has seen roughly 39,000 calls cross the tape -- nearly double the stock's average intraday volume. Most active is the soon-to-expire March 72.50 call, which traders are buying to open on hopes for an extended uptrend through the close.

  • Gilead Sciences, Inc. (NASDAQ:GILD) has surrendered 2.9% to $73.36, after Congress questioned the high price of Sovaldi, the firm's hepatitis C drug. "Our concern is that a treatment will not cure patients if they cannot afford it," stated a letter from Democrats in the House Energy & Commerce Committee, requesting a briefing with GILD. Against this backdrop, the security's options are in demand, as its 30-day at-the-money implied volatility has spiked 5.9% to 31.4%. Total options volume is running at three times the intraday average, though calls remain the contracts of choice. In fact, calls expiring within the next month account for the top five most active strikes, which have all seen new positions created, particularly on the buy side.

  • Finally, Bank of America Corp (NYSE:BAC) is down 1.3% at $17.69, but touched a near-four-year acme of $18.03 out of the gate. Weighing on the equity are the Fed's stress test results; although BAC has enough capital to withstand a financial crisis, some analysts suggest the numbers mean BAC will have to postpone plans to raise its dividend. In any event, the stock has seen roughly 341,000 calls cross the tape today, more than twice the norm. Digging deeper, it looks like one trader may have sold to close a block of 20,000 March 18 calls, and constructed a collar on BAC by purchasing to open June 15 puts and selling to open June 20 calls. By doing so, the shareholder can limit losses in the event of an intermediate-term slide south of $15, but runs the risk of unloading his stake at a discount ($20 per share), should the security perforate the call strike by June options expiration.

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