Market News

February 7, 2014  Fri 10:04 AM CT

Gilead Sciences has fallen since reporting earnings earlier this week, and short-term traders are positioning for further losses.

More than 3,100 February Weekly 76 puts that expire next Friday were purchased mostly for $1.10 to $1.50 this morning, according to optionMONSTER's Depth Charge tracking system. Open interest in the strike was just 557 contracts before the session began, indicating that new positions were established.

These puts lock in the price where GILD can be sold through the end of next week no matter how far it might fall. Because these puts were bought at the money and have such a short duration, the traders are likely making an outright bet that the stock will fall rather than hedging a long position. (See our Education section)

GILD is up 0.79 percent at $77.11in morning trading. The biopharmaceutical company pulled back immediately from an all-time high of $84.40 on Jan. 22 and fell further after issuing weak guidance Tuesday evening.
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