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Gilead Sciences Inc. Message Board

  • naum_98 naum_98 Dec 18, 2013 9:53 PM Flag

    OPTION QUESTION:

    What happens to them when the underlying stock splits :the amount splits likewise ,strike and price adjust so total value remains the same as it was prior to the split ? That's it? Never experienced that with the options,long calls, just might with GILD...

    TIA.
    Regards

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    • In all the cases I encountered, the options split the same way as the underlying stock - if it is 2 for 1, then you receive twice as many options with reduced premium

      • 1 Reply to ibexx
      • actually the premium more than likely will go up but you will have for example on a 70 call now will have two 35 calls and while the premium may be down each contract it will be up on the two contracts total and more than likely the stock price will appreciate even though it is the same stock because it more accessible to some buyers so demand goes up

    • One contract is 100 shares so you would own 200 shares at the same strike price. Several things to look at is the earnings report date,any FDA meeting dates for approval, and the volume or open interest. I only buy options, mainly calls, and in the last 2 months made about a $30,000 profit on an $8,000 investment. Someone on this site, bless his soul, posted yesterday that the open interest on the Dec.21 $70.50 strike call on Gilead was over 3,000, which is huge. So I bought $1200 worth. After the Fed announcement it spiked 460% and I was quick enough to sell. I mainly made money on Gilead with further out options like January and May. If you buy shorter term options you really have to watch it all day. For Gilead and options out 2 to 4 months, if the stock rises 1% the option rises about 15%. The shorter the term the higher the ratio. Surprisingly I have lost more money buying Optus than calls. The difficulty is when to sell. Because of light speed trading it is hard to sell quickly competing with the pros. Gilead is the next Microsoft so I tune out all of the social media noise. You can buy 2014 and 2015 options also then it does not have to be watched 8 hours a day every day.

      Regards,
      TGR

      Sentiment: Strong Buy

 
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