Gilead Sciences Inc. (NASDAQ: GILD) opened at $81.24. So far today the stock has hit a low of $80.48 and a high of $82.17. As of 10:45, GILD is trading at 81.85, up 1.21 (1.5%).The stock made a strong push in early spring to reach the low 80's and a one year high of 84.47 in May. The US Government has recently been ramping up efforts to fight against any future potential flu pandemic, including awarding multi-million dollar contracts to Sanofi-Aventis (NYSE: SNY) and MedImmune (NASDAQ: MEDI) to increase their capacity to produce flu vaccines. GILD, maker of Tamiflu, could stand to benefit from such efforts as well. Recent technical indicators for GILD have been bullish but deteriorating, while S&P gives the stock a 4 STARS (out of 5) buy rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $70 range. GILD hasn't been below $70 since January and has shown support around $78 recently. This trade could be risky if the FDA finds trouble with one of GILD's drugs, but even if that happens, this position could be protected by the support around $70 combined with its 200 day moving average, which is currently at $71 and rising.
Brent Archer is an options analyst and writer at Investors Observer. Do you have any deadwood in your portfolio? Check out the 18 Warning Signs That Tell You When To Dump A Stock.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls a position in GILD or MEDI. He does control a bullish hedged position in SNY.
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