STOCK OPTION TRADING: BASICS TO PROFESSIONAL STRATEGIES – INSPIRED BY DR.KSS BIOTECH THREAD
by Option Trader | May 19, 2017 9:36 pm
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Source URL: https://www.stockgumshoe.com/2017/05/microblog-stock-option-trading-basics-to-professional-strategies-inspired-by-dr-kss-biotech-thread/
Yes, good to see you back here, OT.
May I ask about the ZFGN calls you mentioned in your summary on the other thread?
I have Jan 18 $5 ZFGN calls, not many, but I’m starting to wonder if not much may happen before then. Are yours the same, and if so, how do you feel about them?
Recently doubled my HALO Jan 19 $25 calls. Still very happy with those.
And I converted all my position in CUR into November $5 calls. My feeling is that if the coming results are not good, the stock will lose more than the cost of the calls, and therefore my risk is less this way…
I’m also very interested in how options come to exist and at what prices. Who gets to decide? And what determines if a stock is worthy of leaps?
Many thanks for all your help. I hope you find the atmosphere friendlier these days! I personally feel bad for having been an apologist/interpreter for the man in question. At that point I genuinely just thought it was a communication problem. Live and learn!
lumpified – $no ticker – my best advice for all Gummies is to take advantage of DrKss’ scientific knowledge and forget about projecting near term price performance, with the possible exception of “catalysts” for short term trading as opposed to long term core position.
When your $ZFGN Jan 2018 calls expire, the stock could be $3.00 or $30.00. Six months is an eternity in options trading. I own the same calls so I am slightly biased in favor of $30.00
joined the cur crowd
but with another risk reward setup
long stock @ 5,33
short august 10 call @ 0,85
long august 4 put @ 1,15
basicall paid 5,64 for the stpck with downside protection and upside cap
risking 1,64 with an maximun gain of 4,36
(assuming there is a catalyst either way the next 30 days)
i can live with these odds
This effort to protect for a loss on $CUR shows’I don’t understand options…. If I had previously sold a call option with a $10 strike for at 84cents per and it closed today at 5cents, Id have gained 79cents x 100 = $79 . Wheras if I owned 100 shares at say $5.21 and it closed at $2.54 id have lost $267. I thought the 2 covered each other. I’d be very grateful for explanations of this and what would have been a better move, should anyone be willing.
Selling one call option for .84c the most you can make is $84.00 (less commissions). The potential loss of 100 shares of stock @ $5.21 is $521 if the stock goes to zero.
At least you can feel better knowing that you are only down $267 less $79 = $188 instead of the full $267.
Thank you, I am.
Selling a put option – An investor would choose to sell a put option if her outlook on the underlying security was that it was going to rise, as opposed to a put buyer whose outlook is bearish. The purchaser of a put option pays a premium to the writer (seller) for the right to sell the shares at an agreed upon price in the event that the price heads lower. If the price hikes above the strike price, the buyer would not exercise the put option since it would be more profitable to sell at the higher price on the market. Since the premium would be kept by the seller if the price closed above the agreed upon strike price, it is easy to see why an investor would choose to use this type of strategy. (To learn more, see Introduction To Put Writing.)
Read more: When does one sell a put option, and when does one sell a call option? http://www.investopedia.com/ask/answers/06/sellingoptions.asp#ixzz4pYXHpF5L
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Two Ways To Cut Your Teva Losses
Investors trapped in the stock can use options to get back some of their money. Plus, a compelling VIX trade.
http://www.barrons.com/articles/two-ways-to-cut-your-teva-losses-1502510438?mod=bol-social-tw ht https://twitter.com/odibro/status/896441048674828288
We Used to Know https://youtu.be/5EBQ-ljFlt4
I have recently taken a significant position in November $2.50 and February $5.00 call options for $ATRS. I have not run this past any of the professionals on the website so who knows if it is a decent gamble or not, but here is my thinking:
Antares Pharmaceuticals has 5 PDUFAs coming up within the next 6 months. Not all of them are their own product of course, but one is. This one as a PDUFA in Oct. for a testosterone shot. They make painless injectors and have partnerships with TEVA and Makena.
The data for XYOSTED, the testosterone drug seems pretty strong and I expect approval for this – but this comes from an untrained person, so take that with a grain of salt. If approved, it is expected to become the premier testosterone replacement therapy.
They have had 4 products approved by the FDA in the past 5 years so this is not their first shot and it shows that their injector pens have not been a problem for the FDA. They are not yet profitable, but that day is fast approaching especially in light of these upcoming 5 PDUFAs for 5 new products.
Here is a link to their home page where you can see the other 4 products they have in the pipeline most of which are ANDA or SNDA applications.
http://www.antarespharma.com/Pipeline-Antares-Marketed-Products
But here is a summary of their other 4 products:
Partner Teva
+ Exenatide
Settlement with AstraZeneca for exenatide in US. Currently under FDA review with a settlement launch date of October 15, 2017 pending approval
+ Teriparatide (Forteo) ANDA accepted by FDA
Teva may be considered first to file with 180 day exclusivity pending approval
Teva completed decentralized registration in EU & awaiting market authorization and patent clearance before commercialization
+ Epinephrine Pen
Launch guidance advanced to early 2018 $20 million in devices launched to date
AMAG subcutaneous
Makena presented positive pharmacokinetic data
– PDUFA expected decision in early Feb.
– Antares is experiencing strong development revenue from Makena auto- injectors as the anticipated launch date nears.
Of course they get a royalty on sales as well as get paid to produce the injector pens.
Their own drug for testosterone therapy is by far the most important one for them, but these other 4 should provide a boost to their bottom line as well. I do not think we are not talking an upside of many multiples, but I am hoping for at least a double to $6 from here on the approval of XYOSTED in October. Any partnership approvals will be icing on the cake. With an Oct. PDUFA, it is a quick play.
I have some feb. $5 options as well. I’m hoping that with a nice move in October on XYOSTED approval that the options might make a nice move. The $5 options are probably a bit more risky. I could be all washed up on this. It all hinges on approval in October, but it seems like a reasonable short term play to my untrained eyes.
Just posting an options play I am involved in on my own. I hope to take profits and put them into some of the Dr’s recommended stocks.
Current market cap is around 475 million so it’s not cheap. They had a 2 cents per share loss in Q2. They have some debt – 5 year loan of $35 million available of which they used $25 million so far getting ready for the launch of XYOSTED.
By the way, they will be presenting at Rodman & Renshaw for anyone interested.
Hi niizajim – forgive my naivete for I only have the vaguest understanding of options. But I’ll give it a shot. Current Nov $2.50 bids are .80 and SP is approx $3.00.
You are betting that the SP will increase to $3.30+ in order to realize a gain, correct?
Cheers – Todd
$ATRS (options long) Yes, that’s right. I just listened to their presentation at Rodman & Renshaw and I thought it was excellent. I don’t see any way they will not get approval for the XYOSTED product on Oct. 20. However, I am no expert so that doesn’t really mean much. Anything can happen, but they have already had approvals in the past so they know what they are doing. Their phase 3 results are excellent for their testosterone therapy and will become the choice of treatment if approved.
This one is not going to be a 5-10 bagger like Doc’s recommendations, so not that exciting maybe. I hope for a 2 bagger, but who knows? What will happen by the November expiry date? I don’t know. I might sell some and keep some upon approval.
I hope that by Feb. of next year they will have at least two – three other OKs from the FDA with their partner products. Will that take the share price above $5? I don’t know, but I’m betting that with these approvals, at least the option price will be good enough to get out with a decent profit.
I paid $.20 and $.25 and $.30 for the $5 Feb. 2018 options. IF the price were to rise to $6, I would do quite well, but not sure if that is realistic or not.
Anyway, the Nov. $2.5 options seem like a sure thing IF APPROVED and I think it will be so I’m placing a bet here.
I like the odds of this play. However, I’m woefully short of funds. Patiently waiting on some of DrKSS’s golden eggs to hatch.
Thanks – Todd
My problem too! No free funds now. Used up the last yesterday. Still have some I might be able to sell and free up a little bit. Doc has a hot new play to introduce and I have no money. Oh well, maybe after the gummie bounce, I can get a few shares.
Me too! I’m terrible at keeping dry powder. There’s always something “on sale”. The mindset I try to establish is that if there are more good ideas than I can cover, then I can try to profit a little on swing trading, knowing that if I sell something and it keeps going up I can move profits into something else.
But it doesn’t work! For example, I could have sold APTO at 1.64 two days ago and bough back at 1.40 something yesterday. But I was too chicken!
But anyway, to stay relevant to the thread (kinda) anyone want to hazard a guess as to why HALO Jan 19 $20 calls are increasing in price and HALO Jan 19 $25 calls are going down? It doesn’t make any sense to me, unless for some reason the market thinks HALO will be between those two numbers at that point. Anyway, happy to own both, so never mind….
Carrying a fat position in ’19 $25 HALO. I mistakenly purchased twice the # of calls I was comfortable with .(didn’t see the 1st purchase on my account page so I reordered and then realized I was looking at the wrong tab) Oh well, feel fairly confident gambit will play out in my favor.
($HALO) Well Todd, you should be feeling pretty happy today! I bought 2019 $20 calls because I couldn’t find the $25 calls. So I only have a small amount. Could have had a bunch if I had known how to do it. Someone told me how to find the prices that didn’t show up automatically. That mistake will cost $. Congrats on a good “mistake”!
$HALO – I use Ameritrade and initially could not find the ’19 $25 calls.The default ‘RANGE’ drop down is “near the money” I had to select “All” and this revealed the $25’s.
Cheers – Todd
Well, I have “spare” funds in both our joint account & my own IRA account, but they’re all sitting in the pending stock purchases department with low bids waiting for a temporary drop in stock prices so I can snatch up Dr. KSS’s hot picks at a more affordable price.
Penny
There was a nice drop in price yesterday for some reason. I picked up some more options yesterday. Seems like a good price to buy. Only concern is whether or not the FDA will give some negative guidance concerning the PDUFA. Sometimes a month or so before the PDUFA, they come out with some concerns. Not expecting that, but you never know.
$ATRS – long Nov. options.
Good morning everyone. One thing I’ve picked up from this thread is that it seems as though the best options possibilities involve mid-sized biotechs, which still have room for an outsized gain on positive news, but are probably traded enough so the options are reasonably priced and available. In that vein, I’ve previously bought a bunch of $HALO $20 Jan 2019 calls (yay!) and $PTLA $75 Jan 2018 calls (may not pay off).
I’m thinking now about the steadily-falling $AKAO. The farthest-out calls available is about six months from now–March 2018. I know there are some manufacturing issues, but I’m blanking on the rest of the story. What is the most recent group consensus on when the next catalysts will come? In light of my (probably) biting too soon on $PTLA, is March 2018 too early a date to nibble on this one?
I saw on another thread that someone has some Dec. $12.50 options for $STML. Looks interesting! NP.
I have some November $2.5 call options for $ACRX – PDUFA on Oct. 12th.
What other options are people buying these days?
cancel
$HALO LEAPS 2019 $35 call options are on sale today. I picked some up for as low as $.04 today. Hoping that proves to be a prudent move. Anyway, I thought it was so cheap as to warrant the risk.
Deleted by the author. Not relevant anymore.
$HALO LEAPS
niizajim, i don’t see any $35 jan 19′ calls but only $35 jan 18′. You sure you didn’t mean 2018?
You are SO RIGHT!!! The option date is Jan 19 2018. Oh well. Say good buy to that $ unless the something happens rather quickly.
I say the 19 and I guess thought it meant Jan ’19. Careless mistake. Thanks for pointing that out.
Live and learn!
$HALO LEAPS
Gummies be careful here as it is easy to make potentially very costly mistake by buying (cheaply for sure) jan19’18 30 call instead of jan18’19 30 call.
$Halo – long Jan ’19 calls with 30 strike; as stock moves up we gain unrealized profit and also lose leverage.
Is there any recent info on time frame and/or MC of possible buyout?
Also not sure when later 2019 and 2020
expiration series become available.
Hoping to be able to make some adjustment suggestions when I receive updated info.
Congrats to all Gummies who are now sitting on 100% profit.
$Halo (long Jan’19 calls with 20 and 22 strike prices).
The next scientific catalyst will be release of Keytruda PegpH20 ORR data in gastric and NSCLC cancers in the 4th quarter. It could come any day now.
This is huge because of popularity of Keytruda and it will demonstrate pan-tumor ability of drug. I would expect success. Keytruda showed a response rate in gastric cancer of 13% that lasted anywhere from 3-19 months. The nastiest gastric tumors have high hyluronan – which forms a gel-like matrix around the cancer cells that prevents the drugs from reaching much of the tumor. PegpH20 breaks down this gel-like barrier allowing the drug better access. Better access = better effect = increased ORR.
This trial would mean a lot to Merck as well if there is significant improvement in ORR.
As far as a buy-out, who knows when — but we may see a bidding war between Roche, BMY and Merck.
$HALO – Thanks michmana2 for your excellent post.
I intend to post some ideas regarding an adjustment of positions because
there appears to be a distinct possibility that the potential suitors are getting antsy.
DrKSS may have coaxed us into “homerun territory “- again.
$HALO
Thanks OT. Looking forward to your post.
$HALO
Can anyone help me understand what “antsy” means in this context? As a non-US English speaker, I’m not quite clear whether it means “impatient” or “irritated” as I’ve seen it used both ways. In short, does it mean an early takeover is more or less likely? Many thanks
$HALO Doc has not come out and said it, but he does give indication that he thinks things might happen sooner rather than later. At least that is the way I interpreted some of his comments. I think things are looking up for $HALO recently. Nov. 7th is their earnings report and it should be quite interesting. I think after we hear how things are going, we might know a bit better, but when there will be a buyout is, of course, very hard to predict. In the past he has said maybe by the end of 2018 or in 2019, but perhaps that time frame could be sooner. In this case, I think this is the meaning of “antsy”. (Long HALO)
$HALO
All, I have a question for everyone. I am so new to option trading that “newbie” would be optimistic. As with many of us, my interest lies mostly in Halo calls (leaps) far enough out to be more likely to be in the buyout range. I am not smart enough, yet, to try to actively trade puts and calls as many of you are.
Back a few months (june 4 maybe), OT or someone said that in Nov ’17 the HALO ’20 options might be coming out. Please correct me if that is a misstatement. The prices for the Jan ’19 options have been steadily rising, I believe, so I can’t get them nearly at the price many of y’all did.
So, As time goes on, is it logical that the price of the Jan ’19 calls will continue to rise? And, in general, is it better to wait for the next “round” of call options to come out? AND, if one waits for the next round, will that likely drive the price of the current Jan’19 calls in a particular direction??
Thanks in advance,
The other Rick
Rick, I think the Halo 2020 calls should be more expensive, as there is more time for them to get “in the money”, and hence more chance that they will. But I noticed with the Jan 19 calls that there was a brief period when each strike price started being traded when it was comparatively cheap. So you might be lucky. The appearance of 2020 calls might make the 2019 calls cheaper if lots of people sell the latter to buy the former, but otherwise I think the 2019 should still have the same value.
But I’m no expert!
For the record, I own Jan 19 calls at 20, 25, 30 and 35 strike prices, plus a few March 18s at 25.
Good luck, whatever you decide!
$HALO LEAPS – long Another factor to think about here is the potential rise of the stock price in the near future when they publish ORR numbers for PegpH20-Keytruda in High HA due out sometime this quarter. If those numbers are good, the stock price should react and it is possible those numbers will be out before the 2020 options are out, but who knows? Buy some ’19s now and then buy some 2020s when they come out to cover your bases?
$Halo – Since we Gummies have substantial profits in the Jan ’19 calls and since the Jan ’20’s will be out soon, it might be prudent to take some profits and re-invest in the March’18’s or June ’18’s which sell for much less and then also re-invest in the Jan’20’s with a strike price of at least 30.
The ideal position might be long March (or June) 18’s, Jan ’19’s and Jan’20’s, with increased $ commitment to the later expirations.
Comments appreciated.
Join the discussion$HALO Calls I had bought some $18 Nov calls last week for $.30 to gamble with on their earnings call, closed it today at $1. I still have half my $18 Dec calls that I kept on house money that I will hopefully get to keep through the ORR data due by end of year. I have the $25 LEAPS still as well. I plan on getting a small lot of the June calls, thinking the $35s as a gamble play for a 1st half buyout, and will put more money into the ’20 LEAPS when they come out. Thanks for all your help and knowledge that you have shared on options trading, I have learned a lot.
$HALO calls long You got $18 Nov. calls? What a smart move!! Wish I would have thought of that. Congrats on that move! I’m still building a position here. Have some June $30 calls and 1/19 $30 & $35 calls. Sold my March $24 calls yesterday, but kicking myself for doing that! Made money, but left a lot on the table.
Knowing when to sell the June $30/$35 calls will be key IF it does not reach that level by then.
Your call to buy March ’18s and June $18’s is interesting. Is that for a short term play or are buying at a price that you hope will be reached by that point in time?
niizajim – – $HALO – all my option plays in this stock are intended to make enormous profit upon buyout. I am perfectly prepared to lose some premium along the way. The stock appreciation and subsequent profit are “icing on the cake”. So let’s grab some profit and re-distribute our expirations and strikes.
$HALO – my suggestion is to switch some of the Jan’19 calls into earlier expirations and then to add when Jan’20’s are available.
This seems reasonable – we have 400% profit in Jan’19 25’s and my idea is to lock in some of the profit and cater somewhat to an earlier buyout while retaining a long term position.
a sample spread order might be: Buy 2 March ’18 25 calls and sell 1 Jan ’19 calls for a credit of $1.20 ($120) per spread.
This is only one of many combinations of strike and expiration that are available. It is not trading advice.
Thanks for the wise advice option trader. After looking into it, I sold my .50 Jan 2019 25 Calls for $2.00 locking in some great gains. I currently have some june 18 $35 exposure, I would like to gain some more early exposure like you suggested.
My plan right now is to increase my exposure by buying some more june expirations. But saving enough money from my previous sale to still be positive if they all expire worthless and than buy some 2020’s at that time. What do you think of that strategy of waiting to buy the 2020’s until than or just go ahead an buy a starter position before we know if a buyout will occur before june?
$HALO – Jan’20 options will trade as of Monday (11/13)
The pricing of the prior expirations should not be affected.
Currently the implied volatility of $Halo calls is between 47 and 52 with the out of money Jan 19’s at 50-52 and I expect similar for the Jan20’s.
Two+ years to wait and hope for buyout.
$HALO leaps.
Are any gummies planning to expose themselves to higher strike prices on Jan’20 options? I am considering staying fully invested in 25 and 30 jan ’19 calls (maybe trim a little a bit later) and maybe add some more higher stike calls for 2020 options in the coming weeks. What are your strategies?
$HALO leaps – Doomie, Neophyte here in this league, but believe your consideration is a wise choice. Have some March low 20’s and shall add some June and January 2019 leaps in the coming weeks. Best2ALL
$HALO leaps – hi doomie, may trim some of my large position in ’19 $25 and use profit to purchase ’18 June $20’s and likely some ’20 $30+ calls.
Cheers -Todd
Thanks to all Gummies for your interest and support of this thread.
I have decided to no longer post here and will post my suggestions and conversation on Dr. KSS ‘ main thread.
$Halo calls will be the initial subject of discussion.
Options Trader, I respectfully encourage you and others to continue utilizing this thread for option TRADING as the main thread is for BIOTECH and will become quite congested if the focus is not maintained, TIA Best2ALL
OT – I second Ben’s request to keep posting here on this thread. I barely have time to look at the main thread as the sheer volume of postings is daunting, to the point where I have to skip reading for several days at a time because I actually need to get some sleep.