IB Options Brief: Gilead Sciences, Inc. (GILD)

Posted February 29th, 2012 by Caitlin Duffy in Unusual Activity

Bullish Options Build On Biotech Company Gilead Sciences

GILD ñ Gilead Sciences, Inc.
Bullish activity in the biotechnology companyís options jumped and shares in Gilead Sciences moved up more than 2.0% to $46.18 the same day the drug maker presented at the 2012 RBC Capital Marketsí Healthcare Conference in New York. Positive comments from management along with the impending April 19th first-quarter earnings report from the Company could be catalysts for the sizable bull call spreads accumulating in the April expiry.

It looks like one investor purchased a roughly 15,000-lot April $47/$50 call spread for a net premium of $1.13 per contract to position for shares to extend gains during the next couple of months. Profits may be available on the spread in the event that Gileadís shares rally another 4.2% to surpass the average breakeven price of $48.13, while maximum possible profits of $1.87 per contract pad the investorís wallet should the stock surge 8.3% to top $50.00 at expiration.

Gileadís shares had realized year-to-date gains of 35.0% earlier this month after the Companyís better-than-expected fourth-quarter earnings report sent the stock up as high as $56.50 on the 6th of February. The stock subsequently came back down with a thud shortly after reaching its highest level since 2008, but the options trader responsible for the call activity this morning is poised to benefit should the stock regain its footing in the near term.

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