Gilead Sciences Activist Chatter Spurs Short-Term Call Buying

Shares of Gilead Sciences, Inc. (NASDAQ:GILD) have come off two-year lows as Carl Icahn-related rumors swirl

Feb 13, 2017 at 2:08 PM
facebook twitter linkedin


Options traders are targeting calls on Gilead Sciences, Inc. (NASDAQ:GILD), as the shares trade up amid unconfirmed activist chatter -- namely centered on Carl Icahn. Regardless, GILD stock was last seen up 2% at $67.66, and 84,837 calls have changed hands -- three times what's typically seen at this point in the day. As a point of comparison, just over 22,000 GILD put options have traded, with the stock's single-day put/call volume ratio last seen at 0.26, on track to settle in the 1st percentile of its annual range.

Drilling down, the May 72.50 call is most active, due to what appears to be a bullish roll down from the May 77.50 strike. Meanwhile, shorter-term traders are targeting the February 66 and 67 calls, where it looks as though new positions are being purchased. If this is the case, the goal is for GILD shares to extend today's rally through this Friday's close, when front-month options expire.

More broadly speaking, GILD stock has seen some of the highest options volume over the past 10 sessions. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, 287,328 calls have changed hands on GILD in the last two weeks, compared to 254,182 puts.

While the tilt has been toward calls, speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have been buying to open puts relative to calls at a faster-than-usual clip over this same time frame. Specifically, the stock's 10-day put/call volume ratio of 0.56 across this trio of exchanges ranks in the elevated 83rd annual percentile.

Technically speaking, GILD has been a long-term laggard, with the shares down more than 34% from their late-April annual high at $103.10. More recently, the stock gapped lower last week after Gilead Sciences, Inc. (NASDAQ:GILD) offered up disappointing guidance for 2017. With the shares not far from Thursday's two-year low of $65.38 -- and short interest perched at its lowest point in at least 15 years, meaning there's little sideline cash available to help fuel today's rally -- the risk for the drug stock may be to the downside.

gild shares daily chart

Stay in the loop with stocks on the move. Sign up now for Schaeffer's Midday Market Check.
 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

Schaeffer's Investment Research Master Portfolio Trial
 


 


 
Special Offers from Schaeffer's Trading Partners