GIS trade ideas
Gilead Biotech Aiming HighAlthough the ideas I share with you all revolve around currency pairs, I thought I'd share another specialty of mine: Biotech and pharma stock. If you're in the field, you may have already heard about Gilead having one of the best price to earning ratio of the major biotech companies. You may have also noticed the sharp decline that they experienced in the summer of 2015 which has largely been attributed to a loss in momentum due to the expiration of their patents and increased competition in the market. One could also argue that investors selling their stock contributed to the snowballing drop that seems to still be underway.
Despite all this, there has been a lot of positive news recently with current projects that were once in the pipeline (such as Harvoni and Sovaldi) that have now been approved for the treatment of Hepatitis C. This puts them squarely back in competition with AbbVie and other similarly sized companies. In addition to other projects, the temptation of selling put options on Gilead at this very attractive price should yield dividends within the coming years. That said, the reversal is still not quite there yet but this is a very long term play that you should be ready for.
As with currency pairs, this idea can turn on a dime so you should always take the necessary precautions!
Bull Flag - all jump on board I'll keep on adding to biotech as money is rotated out of tech stocks into more safe havens with dividends.
GILD Covered Call SOLD -1 GILD 100 17 NOV 17 90 CALL @1.00
Adjusted Cost Basis $87.70
Just a few hours ago I didn't see any chance of turning a profit on this investment any time soon. Unexpectedly the stock rallied over 7% today (now up 25% off lows) and above the average year end analyst target.
Expected Outcomes:
- With selling off the 'unlimited upside', if GILD is above 90 (19 delta strike) by Nov expiry and the stock gets called away, I'll at least have brought in 3.76% on my adjusted cost basis (plus dividend yield).
- If the stock is under 90 by Nov expiry the call expires worthless and I keep the credit to reduce my cost basis, and sell another call. This is about 80% probable this point, at 10% below the 90 strike and more than 2 months to expiration. If the stock pulls back sharply I will likely buy back the call and walk away with most of the profit, and aim to sell another call on the next rally in GILD.
I've been sitting on this dog for over a year, suffering through a 27% draw down at the low in June. The stock dividend yields 2.75%, which is at least something while you wait.
The stock is well rated, excellent price to free cash flow, but a 'value trap' with questionable earnings growth long term. Some of the apparent catalysts for todays big up move were acquisition of KITE and FDA approval of new class of gene therapy drugs.
So I jumped at the chance to make this into a profitable trade after waiting for many months. My main goals are to bring in cash flow, reduce cost basis, and reduce positive deltas to form a more neutral portfolio. Yes, it's entirely possible GILD could be worth double what I paid for it in a couple years and I'll have walked away with chump change. Or the market gets a long over due pullback and it's another year of sideways moves in the $65 - $90 range. Who really knows for certain what will happen?
GILD double bottomGILD bouncing within channel with a double bottom. Look for confirmation tomorrow for a long.
Picking a WinnerWorking on Wall Street. and on track to getting my stockbroker license, I might as well start analyzing stock prices. this seems like it will be a good trade in its due time...
long GILD play before and after earningsGILD is a value stock with cheap P/E. it broke downtrend recently and it may be a start of long uptrend. last 2 weeks were good volumes in this stock for an uptrend.
long with target price 75.9 before earnings. after earnings it could drop to 69 and if it holds 69 it can go up to 80.
Long GILD callsGild had a nice pullback from its run up and I have purchased September calls. Targeting the 73.50 area. Proven wrong below 68.
Gilead / GILDLooks to me like it retraced 62% over the last couple of years and it's now on the brink of a trend change with 1) a potential bullish monthly MACD crossover and 2) a potential break out above a 2 year falling wedge. This hypothesis assumes $64 is the bottom. $76 looks like the first step followed by $87. GLTA!!
