Gilead Sciences Surges 3.36% on Landmark Pricing Agreement with U.S. Government

Summary
• Gilead Sciences (GILD) surges 3.36% to $125.55, hitting an intraday high of $126.27 amid a historic pricing agreement with the U.S. government.
• The stock trades above its 200-day moving average ($113.31) and 52-week high ($128.70), signaling strong momentum.
• The agreement includes discounts on HIV/Hepatitis C drugs, future pricing parity with developed nations, and a Direct-to-Patient Program for Epclusa.

Gilead’s shares are surging on the back of a transformative three-year agreement with the U.S. government to reduce drug costs, aligning with President Trump’s affordability agenda. The stock’s 3.36% gain reflects investor optimism over the deal’s manageable financial impact and long-term strategic benefits, including tariff exemptions and U.S. manufacturing incentives.

Government Pricing Pact Fuels Gilead’s Rally
Gilead’s landmark agreement with the U.S. government to lower drug costs has ignited a sharp rally in its shares. The deal includes discounts on existing medicines in Medicaid, future pricing parity with developed nations, and a Direct-to-Patient Program for Epclusa, which will connect patients directly to the drug at a discounted cash price. The company also secured a three-year exemption from Section 232 pharmaceutical tariffs, contingent on further U.S. manufacturing investments. These terms, coupled with Gilead’s $32 billion U.S. manufacturing and R&D pledge, signal a strategic pivot toward affordability and domestic job creation, aligning with Trump’s healthcare priorities and boosting investor confidence.

Pharma Sector Mixed as Merck Trails Gilead’s Momentum
The broader pharmaceutical sector remains fragmented, with Merck (MRK) up 1.38% on news of its GLP-1 drug failing Alzheimer’s trials, while Gilead’s pricing agreement drives a sharper rally. Gilead’s focus on Medicaid discounts and U.S. manufacturing contrasts with Merck’s recent setbacks in neurology, highlighting divergent strategic trajectories. However, sector-wide tailwinds from drug pricing reforms and R&D advancements continue to support long-term growth, though Gilead’s immediate policy-driven gains outpace peers.

Options Playbook: Leveraging Gilead’s Bullish Breakout
• 200-day average: $113.31 (below current price)
• RSI: 38.87 (oversold)
• MACD: -0.567 (bearish) vs. signal line -0.141
• Bollinger Bands: $117.70 (lower) to $128.43 (upper)
• Key Resistance: $128.43 (Bollinger upper band), $128.70 (52W high)
• Support: $123.07 (20-day MA), $121.00 (intraday low)

Gilead’s technicals suggest a short-term rebound after hitting oversold RSI levels and breaking above the 200-day moving average. The stock’s 3.36% surge has pushed it toward the upper Bollinger band, with momentum likely to persist if it clears $128.43. For options, focus on at-the-money calls with moderate deltas and high gamma to capitalize on volatility. The options chain shows strong liquidity in the $125–$126 range, ideal for directional bets.

Top Options Picks:
• GILD20251226C125
- Strike: $125
- Expiration: 2025-12-26
- IV: 19.48% (reasonable)
- Delta: 0.5899 (moderate)
- Theta: -0.2219 (high time decay)
- Gamma: 0.1071 (high sensitivity)
- Turnover: $16,005
- Leverage Ratio: 67.60%
- Payoff (5% upside): $6.28 per share (max(0, 131.83 - 125))
- Why: High gamma and moderate delta make this call ideal for a breakout above $128.43, with leverage amplifying gains if the stock accelerates.

• GILD20251226C126
- Strike: $126
- Expiration: 2025-12-26
- IV: 19.80% (reasonable)
- Delta: 0.4810 (moderate)
- Theta: -0.2017 (high time decay)
- Gamma: 0.1081 (high sensitivity)
- Turnover: $10,649
- Leverage Ratio: 92.45%
- Payoff (5% upside): $5.83 per share (max(0, 131.83 - 126))
- Why: Slightly out-of-the-money but with high leverage and gamma, this call offers amplified returns if Gilead’s rally extends beyond $128.70.

Action Insight: Aggressive bulls should target GILD20251226C125 into a breakout above $128.43, while conservative traders may use GILD20251226C126 for a leveraged play on the 52-week high.

Backtest Gilead Sciences Stock Performance
The backtest of GILD's performance after a 3% intraday surge from 2022 to now shows favorable results. The 3-day win rate is 54.27%, the 10-day win rate is 53.08%, and the 30-day win rate is 60.24%, indicating that the stock tends to perform well in the short term following the intraday surge. The maximum return during the backtest period was 4.85%, which occurred on day 59, suggesting that there is potential for significant gains if the surge occurs at the right time.

Gilead’s Policy-Driven Rally: What to Watch Now
Gilead’s 3.36% surge is a policy-driven inflection point, with the U.S. pricing agreement and U.S. manufacturing incentives creating a tailwind for long-term affordability and profitability. The stock’s technicals suggest a continuation of the rally if it clears $128.43, with the 52-week high of $128.70 acting as a critical psychological barrier. Investors should monitor the Direct-to-Patient Program’s execution and the impact of Medicaid discounts on margins. Meanwhile, Merck’s 1.38% gain in the pharma sector underscores the importance of sector diversification. For immediate action, target GILD20251226C125 for a breakout above $128.43 or GILD20251226C126 for a leveraged play on the 52-week high.