Option Traders Blast Gilead Sciences Stock After IMMU Deal

Gilead Sciences is acquiring Immunomedics for $21 billion

Managing Editor
Sep 14, 2020 at 11:55 AM
facebook twitter linkedin


It's been a whirlwind start to the week, with dealmaking dominating the headlines. One of the more notable is Gilead Sciences, Inc. (NASDAQ:GILD) and their acquisition of Immunomedics (IMMU) for $21 billion, or $88 per share. Analysts have been quick to chime in, with Cantor Fitzgerald noting that the deal -- which adds IMMU's breast cancer treatment drug Trodelvy to its pipeline -- represents a bold step into oncology, which brings a revenue-generating asset into GILD's portfolio immediately.

In response, Gilead Sciences stock is up 3.1% to trade at $66.93, hurtling past former resistance at its descending 30-day moving average. Today's gains also have GILD distancing itself from its year-to-date breakeven point, while also reclaiming its year-over-year breakeven level.

Daily Stock Chart GILD

Options traders have responded in kind. At last check, over 58,000 call contracts have changed hands, with volume running at four times the average intraday amount, and triple the number of puts traded. Leading the charge is the September 70 call, but there are also new positions being sold-to-open at the September 63.50 put. Sellers of those puts are banking on the $63.50 level to serve as a short-term floor in the next week, when the options expire.

Traders looking to speculate on Gilead stock's near-term trajectory should consider options. The security's Schaeffer's Volatility Index (SVI) of 31% sits in the 16th percentile of its annual range, suggesting short-term options are pricing in relatively low volatility expectations. In other words, the biotech stock's near-term options are attractively priced at the moment.

 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 


 


 
Special Offers from Schaeffer's Trading Partners