When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
BioTech Trade Alert - Gilead Sciences, Inc. (GILD) – BUY
BUY Gilead Sciences, Inc. (GILD) February 2021 $57-$60 in-the-money vertical BULL CALL spread at $2.65
Opening Trade
1-29-2021
expiration date: February 19, 2021
Portfolio weighting: 10%
Number of Contracts = 37 contracts
This is a short-term trade that Gilead Sciences, Inc. (GILD) will stay above $60 in 22 days. If you want to be more aggressive then move up your upper strike price to $61, which is where technical support lies.
My medium-term target is $75-$80 so if you are in buy and hold mode, then by all means buy and hold the stock.
GILD's cash cow right now is Veklury.
In the third quarter, the COVID-19 therapy generated nearly all of the company's revenue increase and they will need to diversify into other revenue to prevent a sudden drop off in growth.
There are some concerns, however, that Veklury's growth trajectory will taper off significantly as the pandemic comes to an end and new treatments emerge.
Other GILD pharmaceutical products include its HIV drugs Biktarvy and Descovy continue to hit on all cylinders.
Other notable developments are cancer cell therapies Yescarta and Tecartus. Unfortunately, declining sales for Gilead's older HIV drugs and its hepatitis C franchise are offsetting some of these gains.
Gilead's pipeline includes 42 clinical programs, and eight of them are late-stage candidates. Unfortunately, three of those are targeting indications for filgotinib. Those programs could be in jeopardy after Gilead gave up on hopes of winning U.S. approval for the drug in treating rheumatoid arthritis.
However, I do believe it's worth a short-term trade at this level after this sell-off.
Investors should be aware that volatility is especially high and buying right now is not for the risk-averse.
Here are the specific trades you need to execute this position:
Buy 37 February 2021 (GILD) $57 call at…………..………$8.58
Sell short 37 February 2021 (GILD) $60 call at………….$5.93
Net Cost:……………................………..…….………..…….....$2.65
Potential Profit: $3.00 - $2.65 = $.35
(37 X 100 X $.35) = $1,295 or 13.2% in 22 days
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video by clicking here.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.
Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
