IB Options Brief: Staples, Inc. (SPLS) & Gilead Sciences, Inc. (GILD)
SPLS ñ Staples, Inc.
A number of sizable options trades popped up on the office supplies retailer this week ahead of, and following, the firmís fourth-quarter earnings report this past Wednesday. Shares in SPLS are currently down 2.95% to arrive at $20.43 just before 11:55am, but large-volume options trades initiated on the stock this morning appear to be the work of one or more bullish investors positioning for a substantial rally in the price of the underlying through September expiration.
A total of 10,000 puts sold for an average premium of $0.975 each at the September $19 strike, while 10,000 calls were purchased up at the September $22 strike at an average premium of $1.075 apiece. The average net cost of the bullish plays amount to just $0.10 per contract.
Thus, investors employing the strategy stand prepared to profit in the event that shares in the office supplies firm surge 8.2% over the current price of $20.43 to trade above the average breakeven point to the upside at $22.10 ahead of September expiration.
GILD ñ Gilead Sciences, Inc.
Investors piled into April contract call options on the biotechnology firm this morning to position for shares in Gilead Sciences to rise ahead of expiration next month. Shares in GILD are up 2.75% at $41.09 as of 11:25am. Bulls may be reacting to a number of positive calls on the stock by analysts at various firms this week, as well as to reports that GILD received FDA approval to remove a warning regarding the risk of possible liver injury from the label of its drug, Letairis.
Investors expecting shares to climb higher purchased more than 6,370 calls at the April $42 strike for an average premium of $0.58 each. Call buyers are prepared to make money should the price of the underlying stock rally another 3.6% to surpass the average breakeven price of $42.58 by April expiration day.
More than 9,985 calls changed hands at the April $42 strike in the first half of the trading session on previously existing open interest of just 359 contracts. Traders are heavily favoring calls over puts today, with more than 10 call options traded on the stock for each single put option in play on GILD thus far in the session.
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