Is Gilead Sciences Inc. (GILD) Setting Up for a Long Ahead of Earnings?

Gilead Sciences, Inc. (GILD) is a biopharmaceutical company with operations in North America, Europe, and Asia. The company’s stock is currently trading around $102.00 in a 52 week range of $74.00-$116.83. GILD is has been relatively strong this year with shares rallying more than 8% year to date. GILD is set to report earnings after the bell tomorrow and appears to be setting up well for a long position.

GILD has a relatively strong record on earnings. Over the past 12 quarters the stock has rallied 7 times on earnings day and has rallied from earnings day to the nearest expiration 8 times. On average, shares of GILD move 3.8% on earnings day. This time around market makers are pricing in a move of $4.75 or 4.7% by this Friday’s close. Using this implied move I can calculate an upside target of $106.75 for GILD.

GILD looks relatively strong on a chart as well. The stock is trading well above the Ichimoku Cloud and the future cloud is sloping higher. With a positive technical setup and strong historical performance I will look to get long GILD ahead of the release.

Trade: Buying the GILD May 1st Weekly 106-107 Call Spreads for $0.30
Risk: $30 per 1 lot
Reward: $70 per 1 lot
Breakeven: $106.30