Gilead Sciences Offers New Options for Investors This May

Today, investors in Gilead Sciences Inc (Symbol: GILD) can explore newly listed options for the May 30th expiration. Utilizing our YieldBoost formula at Stock Options Channel, we’ve identified significant put and call contracts within the GILD options chain.

Put Contract Insights

The put contract at a $102.00 strike price is currently bidding at $4.50. By selling-to-open this put, an investor commits to buying shares at $102.00 but collects the premium, reducing their effective cost basis to $97.50 (excluding broker fees). For those already interested in acquiring GILD shares, this alternative could be appealing when compared to the current trading price of $102.66 per share.

Since the $102.00 strike price reflects about a 1% discount from the current share price, there is a chance the put contract could expire worthless. Present analytical data indicates a 55% probability of this scenario. Stock Options Channel will monitor these odds and publish updates on our website, providing a detailed chart related to this contract. If the contract does expire worthless, the premium translates to a 4.41% return on the cash commitment, or 32.21% on an annualized basis, which we refer to as the YieldBoost.

Call Contract Insights

On the call side, the $104.00 strike price contract has a current bid of $4.90. Investors who purchase GILD shares at the current price of $102.66 and sell-to-open a covered call at this strike price are committing to sell their shares at $104.00. With the premium from the call, this strategy could yield a total return of 6.08% at expiration (before commissions), assuming the stock is called away. It’s also wise to evaluate the previous twelve months of trading history for Gilead, as substantial upward movement in shares could limit return potential for the call seller.

Below is a chart displaying Gilead’s trading history, with the $104.00 strike highlighted in red:

The $104.00 strike is approximately a 1% premium over the current trading price, making it out-of-the-money by that percentage. Hence, there is a possibility the covered call could expire worthless, allowing the investor to retain both their stock and premium. Current analytics suggest a 50% chance of this outcome. We will continue to track and chart these probabilities on our website. If the contract does expire worthless, the premium would provide a 4.77% additional return for an annualized 34.84% yield, again termed as YieldBoost.

Volatility Considerations

The implied volatility for the put contract stands at 37%, while the call option has an implied volatility of 40%. In contrast, the actual trailing twelve-month volatility, assessed through the past 251 trading days alongside today’s price of $102.66, is calculated to be 24%. For further options insights, visit Stock Options Channel.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.