Tuesday Options Brief: GILD, YHOO & LINTA

Includes: GILD, QVCA, YHOO
by: Interactive Brokers

GILD - Gilead Sciences, Inc. - Positive results from a Phase 3 study of Hepatitis C drug, sofosbuvir, pushed shares in Gilead are up more than 3.0% this morning to a new all-time high of $43.04 after the company said in a press release that it is "on track to meet its goal of filing regulatory applications in the United States and Europe in the second quarter." The stock is up roughly 20% since the start of 2013, and some options traders are positioning for further gains in the near term. Fresh interest in out-of-the-money weekly call options on Gilead Sciences look for shares in the drug maker to continue to hit fresh highs during the next few trading sessions. More than 480 calls changed hands at the Feb. 22 '13 $43.5 strike in the early going on Tuesday, with most of the volume purchased at an average premium of $0.11 apiece. Call buyers stand ready to profit at expiration should Gilead shares top the average breakeven price of $43.61. The Feb. 22 '13 $42, $42.5, and $43 strike call options were also active this morning, with volumes surpassing open interest levels at each striking price. Bullish positions initiated at the end of last week have generated substantial paper profits for some traders, who find the value of their contracts has jumped sharply following the holiday weekend.

YHOO - Yahoo!, Inc. - Upside call options changing hands on Yahoo this morning suggest some traders are positioning for fresh multi-year highs in the price of the underlying during the next few days. The stock is up 1.8% this morning to stand at $21.39 as of 11:40 a.m. ET. Bullish traders are snapping up in- and out-of-the-money calls, buying more than 700 of the Feb. 22 '13 $21 strike calls and another 450 lots at the $21.5 strike. The Feb. 22 '13 $22 strike calls are seeing the most volume, with around 1,400 lots trading against open interest of 534 contracts during the first half of the session. Time and sales data indicates the most of the $22 weekly calls were purchased for an average premium of $0.04 each. Traders long the $22 strike calls stand ready to profit at expiration this week should Yahoo's shares rally another 3.0% to exceed the breakeven point at $22.04, the highest price for shares in Yahoo since July 2008.

LINTA - Liberty Interactive Corp. - Bearish options in play on the owner and operator of QVC, bodybuilding.com and other digital commerce businesses, looking for shares in Liberty Interactive Corp. to pull back during the next four weeks. Shares in LINTA, up 1.0% this morning at $21.80, have increased more than 10% since the start of 2013. The company is scheduled to report fourth-quarter earnings next Wednesday. The most actively traded contracts on LINTA today are the Mar. $21 strike puts, with roughly 1,100 lots changing hands against open interest of just 80 contracts. It looks like most of the puts were purchased just after 10:00 a.m. ET this morning for a premium of $0.40 per contract. Put buyers may profit at expiration next month should shares in LINTA slide 5.5% from the current price of $21.80 to breach the breakeven point on the downside at $20.60.