Upside options trades in Gilead Sciences turned big profits today on strong quarterly results.
Back on May 3, Investitute’s market scanners identified the purchase of 10,300 December $70 calls for $3.15 to $3.35 with shares at $67.04. Open interest in the strike was only 394 contracts, showing that this was new positioning.
Those calls traded for $7.40 this morning, doubling in value. The stock rose 12.9 percent in the same period, underscoring the kind of leverage that can be achieved through options.
Long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.
GILD closed today up 1.04 percent to $74.96 after peaking intraday at $75.99, its highest price since early January. The biopharmaceutical company beat expectations on the top and bottom lines while raising guidance in its report in yesterday’s post-market.