Options Trading 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.
Share this article with your friends


Premium Services

Education & Strategy

The art of trading

As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

View more education articles »