GILD, URA Options – Unusual Trading Activity – February 10, 2014
This week we’re taking a look at unusual options trading activity in Gilead Sciences (GILD) and Global X Uranium ETF (URA).
As many of you know, unusual options volume can be a valuable indicator as to what traders are thinking, and more importantly, where these stocks are heading in the short-term.
This is something professional options traders pay a lot of attention to, and for good reason… Unusual options activity can “tip off” big moves in a stock, either up or down.
So let’s take a look at some ‘interesting’ activity that caught our eye this week:
Gilead Sciences (GILD)
In the short-term, some traders are betting pharmaceutical giant GILD is going to drop.
GILD is currently trading for $78.75 per share. The share price is 99% above the 52-week low of $39.48 and is just 7% below the 52-week high of $84.40.
Over 3,000 February Weekly puts traded at the 76 strike. These puts, which expire next Friday, were bought for $1.10, all the way up to $1.50. That’s a fair bit of premium to pay for something expiring in a week.
Assuming a $1.50 purchase price, the trade becomes profitable if GILD drops below $74.50 by the end of this week. That’s over $4.00 or more than 10% lower than the current price. The company did issue weak guidance this past week, so there is a potential catalyst for a selloff.
Global X Uranium ETF (URA)
Some unusual action in URA could mean traders believe uranium prices are expected to move higher.
EWI, a fund mostly focused on uranium producers, is currently trading for $15.77. The shares are up 15% from the 52-week low of $13.74 and are 25% below the 52-week high of $21.15.
Recently, traders purchased 5,000 April16 calls for $0.45 to $0.65. These calls will pay off if URA closes above $16.65 by February expiration. That’s less than a $1.00 higher from the current price – although URA would have to break through significant resistance levels to get there.
This ETF doesn’t trade a whole lot… and the options trade even less. Average daily volume is just 160 contracts. As such, this is definitely unusual activity.
More Options Ideas…
That wraps up this week’s unusual options trading and volume…
Keep in mind, there’s a lot more unusual options activity going on than what we discuss here.
We just try to bring you what we feel are the most significant ones– and the ones you might actually be able to make some money on!
So keep an eye on your email inbox… we have a lot more options trading ideas coming your way!
Yours in Profit,
Gordon Lewis
Category: Unusual Options Trading Activity
