Early Options Trading on Gilead Sciences and Fitbit Stocks

Gilead Sciences and Fitbit are both seeing accelerated options trading this morning

May 3, 2017 at 11:53 AM
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Options trading is accelerated this morning on drug stock Gilead Sciences, Inc. (NASDAQ:GILD). Elsewhere, options traders are also targeting wearable tech stock Fitbit Inc (NYSE:FIT) ahead of the company's earnings release this afternoon.  

GILD Options Traders Expect a Rebound in 2017

With GILD shares down 2.3% at $67.03 following the company's first-quarter earnings report, options volume is on pace for the 99th percentile of its annual range, with puts and calls both trading well above the rate expected. Most active by a mile is the December 70 call, where more than 11,000 contracts have traded. Trade-Alert suggests buy-to-open activity is occurring here, meaning options traders are betting on GILD stock rebounding north of $70 by the end of the year. 

Call buying is nothing new in GILD's options pits. In fact, the shares have a 50-day call/put volume ratio of 2.89 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which is an annual high. Said differently, call buying has been much more popular than normal in recent months, relative to put buying. 

Today's price action is also familiar for Gilead Sciences stock. The shares have now shed 21% over the past 12 months, hitting a nearly three-year low of $65.38 back in February. Despite this, the majority of analysts are bullish on GILD, with 10 of 19 saying to buy the security. 

Fitbit Options Active Ahead of Earnings Tonight

FIT's single-day put/call ratio of 2.30 is higher than 98% of all others from the past year, with puts trading at six times the average intraday rate. The weekly 5/5 5.50-strike put is most popular so far, with more than 6,000 contracts exchanged. The data is not entirely clear on how traders are positioning themselves at these strikes, though some of the activity appears to be tied to stock. 

FIT options traders at the ISE, CBOE, and PHLX have generally preferred puts over calls in recent weeks. The shares have a 10-day put/call volume ratio of 1.35 across these exchanges, good enough to rank in the 95th annual percentile. In other words, puts have been bought to open over calls at almost the fastest pace of the past year. 

This penchant for put buying isn't surprising, given Fitbit Inc stock's technical performance. Including today's 2.4% decline to trade at $5.67, the shares are down 69% since topping out at $18 a year ago today. Looking back, the stock has split its post-earnings reactions in the past four quarters, gaining twice in the session after reporting and closing lower twice. This time around, the options market is pricing in a staggering 21.9% swing for FIT stock for Thursday's trading. 

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