Gilead Options & New High In Stock Bring Hope For Further Upside

Gilead Sciences Inc. (NASDAQ: GILD) is seeing shares surge today on news that Bristol-Myers Squibb Co. (NYSE: BMY) has run into some unforseen safety issues with a hep-C candidate called INX-189.  Gilead’s rival treatment is a part of the Pharmasset deal which was widely criticized in 2011 over its $11 billion size.

Bloomberg TV showed that the call options are trading twice as many contracts as the puts but it noted that Gilead’s rise was on signing deals with Indian drug companies to take more versions of its AIDS drugs into India.

At $58.00, Gilead shares are up $4.37 or 8.15% on the news. Keep in mind that the prior 52-week range was $34.45 to $56.50 and this appears to be challenging all-time highs now. We have a prior printed high of $57.63 back in August of 2008.

In the world of options trading, we have seen over 6,000 call options in the active contracts trade for August expiration and over 3,600 for the active September calls.

For the speculative contracts to pay off in intrinsic value in August, Gilead shares have to rise to above $60.40 by August 17.  For the same $60 strike call in September to be profitable in intrinsic value for traders, the price of Gilead’s stock has to rise to above $61.25 by September 21, 2012.

• Update at 12:00 PM EST: Barclays has now raised Gilead to Overweight and downgraded Bristol-Myers to Equal-weight.

JON C. OGG