Options Check-Up: Gilead Sciences, Inc., NQ Mobile Inc, and Visa Inc

Analyzing recent option activity on Gilead Sciences, Inc., NQ Mobile Inc (ADR), and Visa Inc

Oct 15, 2014 at 7:32 AM
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Among the stocks attracting attention from options traders lately are biopharmaceutical firm Gilead Sciences, Inc. (NASDAQ:GILD), Beijing-based mobile security issue NQ Mobile Inc (ADR) (NYSE:NQ), and credit card concern Visa Inc (NYSE:V). Below, we'll break down how options buyer are positioning themselves, and how much speculators are willing to pay for their bets on GILD, NQ, and V.

  • Put players continue to be active in GILD's options pits of late, as evidenced by data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, the equity's 10-day put/call volume ratio across this trio of exchanges sits at 0.55 -- in the 83rd percentile of its annual range. Those wanting to purchase short-term options ahead of the company's earnings report -- slated for release after the close on Tuesday, Oct. 28 -- are still able to find a bargain. In fact, the equity's Schaeffer's Volatility Scorecard (SVS) arrives at a lofty 86, suggesting short-term GILD options are reasonably priced relative to the probability of an outsized move in the shares. On Tuesday, GILD closed 4.2% lower at $97.18, on concerns of increased competition from Johnson & Johnson's (NYSE:JNJ) hepatitis C treatment Olysio. Year-over-year, though, the shares have rallied roughly 53%.

  • NQ option traders have taken the optimistic route in recent weeks, per the equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 20.99, which ranks just 1 percentage point from an annual bullish peak. Meanwhile, with the company tentatively slated to step into the earnings confessional between Wednesday, Nov. 12 and Sunday, Nov. 16, traders have been willing to pay a bit more for premium on the stock's short-term options. Since Sept. 30, NQ's 30-day at-the-money (ATM) implied volatility (IV) has jumped to 170.1% from 104.2%, and is currently docked higher than all but 3% of other similar readings taken in the past 12 months. On the charts, NQ Mobile Inc (ADR) has made some big moves to both the upside and downside in 2014, however, the moves lower have been more noteworthy, resulting in a 48.6% year-to-date deficit. On Tuesday, NQ settled at $7.56.

  • V also has its quarterly earnings report on the radar, with the results due out after the market closes on Wednesday, Oct. 29. Ahead of the scheduled event, option traders have grown increasingly bearish. At the ISE, CBOE, and PHLX, for example, the security's 10-day put/call volume ratio has surged to 1.91 from 0.87 over the past two weeks, and now ranks higher than 98% of similar readings taken in the past year. Amid this accelerated demand, Visa Inc's short-term options are growing more expensive, from a volatility perspective. Looking back to the end of last month, V's 30-day ATM IV has risen to 25.7% from 20%, and is currently ranked in the 94th annual percentile. Technically speaking, V has given back 9.8% since hitting its most recent high of $224.75 on July 15, and yesterday, the shares finished the session at $202.72.

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