Bulls score again with $GILD

Option traders logged large profits in Gilead Sciences (GILD) today for the second session in a row.

On Feb. 6, our Unusual Activity Service detected the purchase of 11,000 April $80 calls for $0.76 to $1.12 above open interest of 805 contracts with shares at $67.60. Market Rebellion founder Pete Najarian cited the unusual activity on CNBC’s “Halftime Report” at that time.

Those calls have traded for as much as $2.30 so far today, more than twice their purchase prices. The stock rose 9.25% in the same time frame, underscoring how quickly options can far outperform their underlying shares.

It is the second winning trade in the name posted on Market Rebellion in as many days.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

GILD reached $73.85 right after the opening bell today but has pulled back to $70.04 in midday trading, off 3.92% on the session. The pharmaceutical giant has rallied on reports of potential progress on drugs to combat the coronavirus.