The problem with this stock is not shorts, but lack of shorts. The only truly active shorts are those who sell out of the money calls.
...but has its thumb on the scales. Buy @ 89.24 sell @ 89.25. Buy @ 89.49 sell @ 89.50. And you can be fairly sure that the shares The Box was buying at 89.49 will be dumped in at 89.75 to try to hold the price there for a while. I think this should close at 90. But the action over the last half hour should be interesting in any case.
PS The ask on those Aug95 calls is now .64 - that's a 25% jump over the last half hour. Perhaps a little clue there to next week's pricing.
I don't think the options action dictates the price, but it provides valuable clues. The large holders enhance their returns by selling options - both puts and calls - which they expect to expire worthless. And if you did expect that, why would you add shares until Monday -- or, perhaps, the latter part of today's session?
..(or, more accurately, let it fall below there) just to make sure the last of today's call option holders would throw in the towel. Now watch the Aug95 call start to rally. (up from .51 to .56 in the last 5 minutes) They will be selling these to you next week, which will necessitate taking the stock up to 93.50.
There is little upside on betting on a sure thing ... even if it wins by 6 lengths. However, after tomorrow, when all the disappointed $2 bettors have torn up their call options and slunk off, this will resume its upward trajectory.
No one with half a brain will add to their position until the call options wash out tomorrow. And no one with half a brain will short it here.
If you really are short - as opposed to buying some cheap puts, I'd cover today. This will go to 93.50 next week.
You'll be fine. Let the options holders take their customary beating and we'll be on our way up again. Incidentally, the IBB (and I presume the other biotech ETF's) of which GILD is over 8%, is down about 1.4% today.
What's weird is that the July call holders expected a windfall, even though the market was telling them otherwise. Why should any large holder add shares here when the stock is being tamped down by the washing out of tomorrow's options? Sometime late tomorrow would be a great time to add more, since you know that they'll push it up towards 93.50 next week in order to sell the August 95's. In fact, anytime tomorrow when it looks like it's heading for 91 would be a buy signal in my book.
If you've never seen a bear raid - which this is - you've haven't lived very long. The large blocks being thrown in after hours show that this was being pushed down aggressively.
When the options MM's sell calls to the overenthusiastc, they are, in effect, shorting the stock. And since these hopeful folks can always be relied upon to cut their own throats ( the smarter ones having sold their calls Tuesday or yesterday), the MM's almost never lose this bet. As today demonstrates.
Medivation (MDVN): Goldman Sachs Sees Nice Setup in Q2
8:53 AM ET, 07/22/2014 - Street Insider
"Goldman Sachs maintained a Buy rating on Medivation (NASDAQ: MDVN) with a price target of $88. Analyst Navdeep Singh sees a nice setup into Q2. "MDVN s partner on Xtandi, Astellas, is expected to announce earnings results on Aug 1. In our view, Xtandi should be able to post a solid Q2 due to: (1) carry-over of Q/Q end-user demand growth of ~10% in Q1, (2) publication of PREVAIL data in NEJM during ASCO in June and (3) PREVAIL presentation at ASCO GU in January. Hence, we are raising our Xtandi US sales estimates for Q2/2014 to $133mn/$574mn from $126mn/$560mn. We are also updating Xtandi milestone payments to MDVN from Astellas. As a result, our 2014 diluted GAAP EPS goes to $1.61 from $1.29," said Singh. For an analyst ratings summary and ratings history on Medivation click here. For more ratings news on Medivation click here. Shares of Medivation closed at $72.58 yesterday."
If you were thinking of adding more shares and you saw all those hopeful retail investors sitting on call options which expire Friday, why wouldn't you wait until late Friday or perhaps early Monday before buying? Frankly, given the level of euphoria, I'm surprised that it didn't close at 88.50
At best, I think it might sell down to 88, then continue upwards toward 92-3. This is a great stock to own for longterm growth. All those who are playing it for the ultra short term are missing the point, I think.
The options suggest that this will go no higher than 92, even if the earnings are strong. I would expect it to sell off a bit,even on good news, then rally tomorrow. Assuming that earnings are in line with expectations and there are no surprises. The major upside now would seem to reside in a boost in projected 2015 earnings.
Get a grip. If you're lucky enough to live into decrepitude, burning up your GILD profits for nursing home care, you'll be grateful for all those Guatemalan types who'll be changing your diapers. One way or another, sick people will get treated. Not because we're noble or naïve, but because it's the smart thing to do. HIV, and to a lesser degree HPC, are contagious diseases, and there's a net societal benefit in controlling them. Note that we even provide lifetime care for people who injure theirs skulls or spines by falling off their Harley-Davidsons ... even if they were stupid enough to not be wearing a helmet. Maybe we are naïve.
Yeah. I had to Google it to be sure. I was lucky enough to own some PBYI when it made its first surge from 40 to 140 last year. I congratulated myself on selling it at around 120 as it slipped down into the 50's on an inconclusive trial. Then I saw it crossing last week in the 60's and thought, "I should check that out again." But, alas, I didn't. To illustrate my point, PCYC - for which the consensus earnings estimate in 2015 is 23 cents - is up 9 points at the moment. In fact, the short positions onvirtually all the biotechs are getting taken out today. Which suggests that the problem with GILD is that everyone likes it too much and there aren't enough shorts.