Gilead Sciences Stock Ripe for a Pre-Earnings Options Trade

The drug stock has tended to make outsized moves over the past year

Jul 16, 2018 at 12:46 PM
facebook X logo linkedin


Earnings season is kicking into high gear, with several blue chips on tap to report this week. Stocks have the tendency to make volatile moves after a company's earnings report, and those looking for a potential trading opportunity may want to consider hepatitis specialist Gilead Sciences, Inc. (NASDAQ:GILD), which has tended to exceed volatility expectations over the past year -- a boon to would-be premium buyers.

Taking a quick step back, GILD is scheduled to report second-quarter earnings after the market closes next Wednesday, July 25. Over the past eight quarters, the drug stock has averaged a single-session post-earnings move of 4.3%, regardless of direction. Overall, though, most of these reactions have been unfavorable, with six of those post-earnings returns being negative over the two-year time frame.

Those contemplating a pre-earnings options trade on GILD may want to consider a premium-buying strategy, such as a straddle. This is based on the stock's elevated Schaeffer's Volatility Scorecard (SVS) reading of 83, out of a possible 100. This means the equity has made outsized moves relative to what the options market has expected, looking back 12 months.

What's more, options on Gilead Sciences stock are relatively cheap at the moment, from a historical standpoint. The equity's Schaeffer's Volatility Index (SVI) was last seen at 28% -- in the 27th percentile of its annual range. In other words, short-term options are pricing in relatively low volatility expectations at the moment.

Looking at the charts, GILD shares have been trending higher since their May 3 annual low of $64.27, up 19%. Along the way, the stock filled its early May bear gap, and is now trading back above its 200-day moving average -- which served as support late last year. Nevertheless, the security is down 0.6% today at $76.98, after Leerink struck a cautious tone on biotech earnings, but said Gilead Sciences is in a strong position to beat estimates.

gild stock daily chart july 16

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI