Most Active Weekly Options: Gilead Sciences, Inc. and Tesla Motors Inc

Weekly option traders have been circling biotech Gilead Sciences, Inc. (NASDAQ:GILD) and electric vehicle maker Tesla Motors Inc (NASDAQ:TSLA)

Sep 28, 2015 at 2:43 PM
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The 20 stocks listed in the table below have attracted the highest total weekly options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. Two notable names are pharmaceutical concern Gilead Sciences, Inc. (NASDAQ:GILD) and electric vehicle maker Tesla Motors Inc (NASDAQ:TSLA).

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GILD has struggled along with biotechs recently, and is on pace to end the month beneath its 20-month trendline for the first time in more than four years. The shares are down 4.3% to sit at $95.84 -- which would mark a year-to-date closing low -- today, bringing their month-to-date deficit to 8.7%. What's more, GILD is on pace for its first close in double-digit territory since early April.

Exacerbating the sector struggles, the Securities and Exchange Commission (SEC) today charged five people with insider trading ahead of GILD's purchase of Pharmasset in 2011. The alleged offenders collectively agreed to pay about $489,000 to settle the charges.

Meanwhile, option bears have been upping the ante during the past two weeks. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 0.59 stands in the 79th percentile of its annual range.

In the weekly options series expiring next Friday, Oct. 9, the round-number 100 strike has garnered quite a bit of attention, with almost 3,700 contracts added during the past five sessions -- the biggest increase of any strike. Those who bought the puts to open were expecting GILD to retreat into double-digit territory by the end of the week -- a prediction that's coming to fruition today.
 
What's more, Gilead Sciences, Inc.'s (NASDAQ:GILD) short-term options traders are paying a pretty penny to gamble on the shares. The equity's Schaeffer's Volatility Index (SVI) of 42% stands higher than 78% of all other readings from the past year, suggesting GILD's near-term options are pricing in relatively lofty volatility expectations. Likewise, the stock's 30-day at-the-money (ATM) implied volatility has jumped to 52.2% -- in the top percentile of its annual range -- and GILD's Schaeffer's Volatility Scorecard (SVS) of just 6 implies that the stock has tended to make undersized moves during the past year, relative to option traders' expectations.

Shifting our gaze, TSLA is down 2.9% at $249.38, struggling to stay in the black for September. The stock is in danger of closing beneath its 20-day moving average for the first time since Sept. 1, and traders are keeping a close eye on the seemingly contagious European automaker scandal and anxiously awaiting the company's Model X launch tomorrow.

While most of last week's options activity occurred in the now-expired weekly 9/25 series, the equity's weekly 10/2 240-strike put saw open interest jump by roughly 1,300 contracts. The weekly put is also most popular today, with more than 4,100 contracts exchanged. Those buying the put to open expect TSLA to breach $240 by the end of the week.

In fact, today's put/call ratio of 1.63 stands higher than all others from the past year, with intraday put volume running at 1.4 times the norm. On the ISE, CBOE, and PHLX, the carmaker sports a 10-day put/call volume ratio of just 0.97 -- in the 57th percentile of its annual range. 

Outside of the options pits, short interest on TSLA grew by 5.3% during the past two reporting periods. These pessimistic positions now account for a healthy 26.3% of the stock's total available float, representing more than seven sessions' worth of pent-up buying demand, at Tesla Motors Inc's (NASDAQ:TSLA) average pace of trading.
 

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