GILD – Heavy Options Activity

 

Gilead Sciences Inc. (GILD) Nasdaq

 
GILD dropping hard after MRK receive the FDA approval for a less expensive alternative to Gilead’s hepatitis C drug and pricing it with more than 30% discount to the competitor drugs from Gilead and ABBV.

We notices a huge Feb 19th call options activity, with over 25K of $89 Call options and over 52K of $93 calls and over 25K of $97 calls. There was a combo purchased in Febreuary monthly GILD options. It was a call butterfly at 89/93/97, purchased this morning at 10:30am. It was executed at a debit of $.50 per spread, which makes the total size of the play $1.25M. The trade is currently down 25%. The options were executed at mid-range. The peak return is 700% @ $93, the spread for 200% return upon expiration is $90-$95.50 (give or take).

This is a risk averse bullish play. He is counting on a recovery, and the trader is smart. GILD volatility is very high right now, and he made a Vega negative trade. So if this does recover, it will be a supercharged recovery with both volatility and underlying price working in his favor. If it doesn’t work out, he will take on max loss at $1.25M.

Disclosure: Author have no position in GILD

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1 Response

  1. Jason DeLorenzo
    This butterfly doesn't look like it will finish in the money.
    Feb 02, 2016 |
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