GILD – Gilead Sciences, Inc. – Biopharmaceutical company, Gilead Sciences, attracted bullish options traders today despite the 1.35% decline in the value of its shares to $45.84. Near-term optimistic individuals purchased debit call spreads in the February contract to position for a rebound in share price ahead of expiration. Investors bought approximately 11,000 calls at the February $47 strike for an average premium of $0.73 each, and sold roughly the same number of calls at the higher February $49 strike for about $0.19 apiece. The net cost of the spread amounts to $0.54 per contract. Investors stand ready to accrue maximum potential profits of $1.46 per contract in the event that Gilead’s share price rallies 6.90% from the current value to $49.00 by expiration. The stock must increase at least 3.70% before call-spreaders break even at $47.54. Options implied volatility on the biopharm-firm is up roughly 6.6% to 29.60% as of 11:50 am (EDT).
FXI – iShares FTSE/Xinhua China 25 Index Fund – Shares of the FXI, an exchange-traded fund that invests in 25 of the largest and most liquid Chinese companies, fell 2.40% to $37.10 today. However, the decline in share price did not deter bullish investors from making optimistic trades on the fund. It looks like options players utilized a couple of different strategies in order to assume bullish positions. One investor purchased a debit call spread. The trader bought 9,000 calls at the March $38 strike for a premium of $1.56 apiece, and sold the same number of calls at the higher March $41 strike for $0.54 each. The investor paid a net premium of $1.02 per contract, but stands to make maximum potential profits of $1.98 apiece if shares of the underlying stock trade above $41.00 ahead of expiration. Shares must increase at least 5.15% from the current price before the trader breaks even at $39.02. Another options-bull appears to have initiated a risk reversal. It looks like the investor sold 22,000 puts at the March $35 strike for an average premium of $1.09 each in order to purchase the same number of calls at the higher March $40 strike for approximately $0.75 apiece. This individual pockets a net credit of $0.34 per contract, which he keeps as long as shares trade above $35.00 through expiration day. The long call stance positions the trader is amass additional profits to the upside only if the price of the stock exceeds $40.00 ahead of expiration in March.
WLP – WellPoint, Inc. – Bullish options activity on health benefits company, WellPoint, Inc., took place in the March contract even though shares are down 1.30% to $62.01 today. Investors purchased call spreads on the stock to position for a rebound in the price of the underlying stock by March expiration. Bulls picked up roughly 5,000 calls at the March $65 strike for a premium of $1.50 each, spread against the sale of 5,000 calls at the higher March $70 strike for approximately $0.45 premium apiece. Optimistic traders paid a net premium of $1.05 per contract for the debit spread. The parameters of the trade dictate that maximum potential profits of $3.95 per contract are available to investors if WellPoint’s share price rallies through $70.00 ahead of expiration. Option traders long the debit spread are hoping shares increase at least 6.50% from the current value to reach the breakeven point on the trade at $66.05. Maximum available profits accrue only if WLP shares surge 12.90% to $70.00 by expiration day.
EEM – iShares MSCI Emerging Markets Index ETF – Bearish options trading patterns continue today as shares of the emerging markets exchange-traded fund relinquished another 2.50% to stand at $36.68. The value of the underlying stock is down 15.60% from a 52-week high of $43.47 attained back on January 11, 2010. Apparently at least one investor is bracing for continued bearish movement in the price of the fund through June expiration. The trader initiated a bearish risk reversal by selling 7,000 calls at the June $42 strike for a premium of $1.04 each in order to partially finance the purchase of the same number of put options at the June $35 strike for $2.22 apiece. The net cost of the reversal play amounts to $1.18 per contract. Profits to the downside accumulate if shares of the fund slip 7.80% beneath the current day’s price to breach the breakeven point of $33.82 by expiration in June.
