GILD Analysis

Gilead Sciences Inc. (GILD)

Update 5/3/2017: GILD fell sharply after earnings were published and then traced a zig-zag pattern only slightly above its low in the decline. I exited a 24.9% of maximum potential profit.

Shares declined by7 2.9% over one day, or a -1,042% annual rate. The options positoin produced a +33.2% yield on debit for a +12,114% annual rate


GILD publishes earnings on Tuesday after the closing bell.

I shall use the series of weekly options that trade for the last time 10 days hence, on May 12.

Implied volatility stands at 29%, which is 2.8 times the VIX, a measure of the volatility of the S&P 500 index.

GILD’s IV stands in the 63rd percentile of its annual range and the peak of its most recent broad movement.

The price used for analysis was $69.09.

Premium: $3.09 Expire OTM  
GILD-iron fly Strike Odds Delta
Long 76.00 91.7% 9
Break-even 72.09
Short 69.00 51.9% 51
Short 69.00 58.3% 49
Break-even 66.09
Long 63.00 89.6% 9

The premium is 48% of the width of the position’s wings.

The risk/reward ratio is 1.2:1.

Decision for My Account

I have entered a position on GILD as described above. The stock at the time of entry was priced at $69.02.

By Tim Bovee, Portland, Oregon, May 2, 2017

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