Gilead Sciences (GILD) PriceWatch Alert for November 3, 2009

Posted: Tuesday, November 03, 2009 8:16 AM EDT
By: Market Intelligence Center Staff

Gilead Sciences (NasdaqNM: GILD) closed yesterday at $42.67. So far the stock has hit a 52-week low of $39.37 and 52-week high of $53.28. Gilead Sciences stock has been showing support around 41.99 and resistance in the 43.49 range. Technical indicators for the stock are Bearish and S&P gives GILD a very positive 5 STAR (out of 5) strong buy rating. GILD appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Jan '10 43 covered call (GDQ AA) for a net debit in the $40.37 area. That is also the break even stock price for this trade. This covered call has a 74 day duration, provides 5.39% downside protection and a 6.51% assigned return rate for a 32.13% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the GILD Jan '11 22.50 Call (OJK AX) and selling the Jan '10 43 call (GDQ AA) for an $18.55 debit. The trade has a 74 day life and would provide 3.80% downside protection and a 10.51% assigned return rate for a 52.00% annualized return rate (for comparison purposes only). Gilead Sciences does not pay dividends at this time. [ATU-Seven Summits Research]