Put Volume Pops in Smithfield Foods Inc. (SFD)

Gilead Sciences, Inc. (NASDAQ:GILD) – Far out-of-the-money put options trading on Gilead Sciences this morning protect against a severe pullback in the price of the underlying to the lowest levels of the year through June expiration. Shares in GILD, up around 125% since this time last year, gained 2.2% today to trade at $51.80. Traders snapped up around 1,890 of the June $37 puts for a premium of $0.15 each, and purchased 2,797 of the June $35 strike puts at a premium of $0.11 apiece at around 10:10 a.m. ET this morning. Put buyers may be securing disaster insurance to protect long positions in the underlying stock, or establishing outright bearish bets that profit from double-digit percentage declines in the share price. The $37 puts make money if shares in GILD drop nearly 30% from the current price to trade below the breakeven point at $36.85, while the $35 strike puts look for a more than 32% dip in the share price to $34.89 by June expiration. Gilead Sciences reports first-quarter earnings on May 2nd after the closing bell.

Caitlin Duffy
Equity Options Analyst

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