Gilead Sciences Stock Rallies On Arthritis Drug Data

Analysts believe the drug could net $6 billion in annual sales

Managing Editor
Sep 12, 2018 at 9:54 AM
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Gilead Sciences, Inc. (NASDAQ:GILD) stock is up 3.9% to trade at $75.04 this morning, after the biotech name's rheumatoid arthritis drug filgotinib met its primary goals in a late-stage study. The treatment is part of a collaboration with Galapagos (GLPG), and some are forecasting the drug could see annual sales of $4 to $6 billion worldwide. 

On the charts, Gilead Sciences stock is headed towards its best day since late January. The shares rallied 23% from their bottom of $64.27 on May 3, but were turned away at the $79 level earlier this summer, and so far today are struggling to overcome the 200-day moving average.

Options traders have been targeting GILD puts over calls at a quicker-than-usual clip lately. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the drug stock with a 10-day put/call volume ratio of 0.66. While this still shows call buying has topped put buying on an absolute basis, the reading's annual percentile rank of 91% indicates this level of interest in put buying relative to call buying is quite unusual.

Echoing this, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.73 ranks in the 92nd percentile of its annual range. This shows that short-term traders have rarely been more put-heavy toward the security in the past year.

The good news for those buying premium is that short-term options are attractively priced right now, from a volatility perspective. This is based on the security's Schaeffer's Volatility Index (SVI) of 24%, which arrives in the 16th percentile of its annual range.

Furthermore, the security has been a good target for premium buyers during the past year. That's according to its Schaeffer's Volatility Scorecard (SVS) of 89 out of 100, which shows it's tended to make much bigger-than-expected moves on the charts compared to what the options market was expecting.


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