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Eleventh-hour Gilead Sciences, Inc. traders roll the dice on another record high
The 20 stocks listed in the table below are the S&P 500 Index (SPX) components that have attracted the highest weekly options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is biopharmaceutical firm Gilead Sciences, Inc. (NASDAQ:GILD), as eleventh-hour option bulls gamble on a fresh all-time peak.
After taking a post-earnings dip yesterday, Gilead Sciences, Inc. is up 3% today -- and earlier hit a record high of $114.35 -- after a pair of analysts maintained their bullish stances on the stock. Specifically, S&P Capital IQ reiterated its $150 price target, citing forecasts for "a re-acceleration of Hepatitis C sales driven by Harvoni in the fourth quarter and 2015." Elsewhere, an analyst at Citigroup suggested traders "buy the dip as the destocking in Sovaldi will be compensated by stocking in Harvoni in the fourth quarter ... We continue to expect material upside to consensus estimates in 2015 for Hepatitis C and this drives our conviction in the stock."
Against this backdrop, calls are trading at 1.2 times the average intraday rate, and are outpacing puts by a 2-to-1 margin. A significant portion of the day's action is being driven by eleventh-hour speculators, as five of GILD's 10 most active options expire at tomorrow's closing bell.
Receiving the most attention is the equity's weekly 10/31 115-strike call, which is being bought to open for a volume-weighted average price (VWAP) of $0.56. Based on this average entry price, breakeven for today's call buyers is $115.56 (strike plus the VWAP). Gains will accumulate on a move north of here -- representing a new all-time peak for the shares -- while losses are capped at the premium paid, should Gilead Sciences, Inc. (NASDAQ:GILD) stay south of the strike through tomorrow's close.