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.
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