Gilead Sciences - GILD has been at the center of the news cycle for weeks on any hope of success of remdesivir to treat Covid-19 patients. The company will report Q1 earnings after the close. The stock is up over 25% YTD. Remdesivir isn't its only drug, and the company faces headwinds on some of its others. The conference call should be an interesting one.
2 week expected move ~8.7%. From OptionsAI technology:
Ways to Play
There are a couple ways to look at GILD. The first is very short term, capturing the earnings event itself. It's unlikely we get clarity on remdesivir today, data takes time. The earnings will reflect the past. A short term bearish target, fading the move higher into earnings gives a few options. From OptionsAI technology with a bearish target of ~$77 for May 15th expiration:
Typically selling a vertical into an earnings event is a way to incorporate expected collapsing volatility (after earnings) with a directional target. In this case it's a bit tricky as the news cycle will continue for GILD. Playing with the strikes on that short call spread gives a sense of risk/reward adjusting dependent on exact strikes. Using that strategy is for those that think the positive news is somewhat priced in short term.
Looking a bit farther out, and expecting some volatility to remain in the stock as more data comes, let's look at a bullish target to ~$100 in June:
No one knows how this is all going to play out for GILD but options, particularly multi-leg allow risk to be defined and short term and longer term views to be expressed more precisely and efficiently with trading funds. Every trade starts with a plan, in this case, it's a price target. Whether you're bullish or bearish into the print, think in time frames and targets and take what the options market is giving.
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