Options Intelligence Report: Gilead Sciences, Inc. (GILD) & iShares FTSE/Xinhua China 25 Index Fund (FXI)
GILD - Gilead Sciences, Inc.
Biopharmaceutical company, Gilead Sciences, attracted bullish options traders today despite the 1.35% decline in the value of its shares to $45.84. Near-term optimistic individuals purchased debit call spreads in the February contract to position for a rebound in share price ahead of expiration. Investors bought approximately 11,000 calls at the February $47 strike for an average premium of $0.73 each, and sold roughly the same number of calls at the higher February $49 strike for about $0.19 apiece. The net cost of the spread amounts to $0.54 per contract.
Investors stand ready to accrue maximum potential profits of $1.46 per contract in the event that Gilead's share price rallies 6.90% from the current value to $49.00 by expiration. The stock must increase at least 3.70% before call-spreaders break even at $47.54. Options implied volatility on the biopharm-firm is up roughly 6.6% to 29.60% as of 11:50 am (EDT).
FXI - iShares FTSE/Xinhua China 25 Index Fund
Shares of the FXI, an exchange-traded fund that invests in 25 of the largest and most liquid Chinese companies, fell 2.40% to $37.10 today. However, the decline in share price did not deter bullish investors from making optimistic trades on the fund. It looks like options players utilized a couple of different strategies in order to assume bullish positions. One investor purchased a debit call spread. The trader bought 9,000 calls at the March $38 strike for a premium of $1.56 apiece, and sold the same number of calls at the higher March $41 strike for $0.54 each. The investor paid a net premium of $1.02 per contract, but stands to make maximum potential profits of $1.98 apiece if shares of the underlying stock trade above $41.00 ahead of expiration. Shares must increase at least 5.15% from the current price before the trader breaks even at $39.02. Another options-bull appears to have initiated a risk reversal.
It looks like the investor sold 22,000 puts at the March $35 strike for an average premium of $1.09 each in order to purchase the same number of calls at the higher March $40 strike for approximately $0.75 apiece. This individual pockets a net credit of $0.34 per contract, which he keeps as long as shares trade above $35.00 through expiration day. The long call stance positions the trader is amass additional profits to the upside only if the price of the stock exceeds $40.00 ahead of expiration in March.
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This material is not intended as an offer or solicitation for thepurchase or sale of any security or other financial instrument.Securities or other financial instruments mentioned in this materialare not suitable for all investors. Any opinions expressed herein aregiven in good faith, are subject to change without notice, and are onlycorrect as of the stated date of their issue. The information containedherein does not constitute advice on the tax consequences of making anyparticular investment decision. This material does not take intoaccount your particular investment objectives, financial situations orneeds and is not intended as a recommendation to you of any particularsecurities, financial instruments or strategies. Before investing, youshould consider whether it is suitable for your particularcircumstances and, as necessary, seek professional advice.
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