Calls are changing hands at quadruple the average intraday amount
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.
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.