AGIX today (and April calls)

M

mnx

15% up move today and I don't see any news on yahoo or cbsmarketwatch...

also insane volume on the April calls...

I only noticed this because I'm short a couple April 25 calls (@ 2$)... I've got some long february calls in place right now to protect the position...

any news I'm missing out on?? Is the crazy volume on the April calls a sign to get the heck out while you still can??

cheers!

-mnx
 
Quote from mnx:

15% up move today and I don't see any news on yahoo or cbsmarketwatch...

also insane volume on the April calls...

I only noticed this because I'm short a couple April 25 calls (@ 2$)... I've got some long february calls in place right now to protect the position...

any news I'm missing out on?? Is the crazy volume on the April calls a sign to get the heck out while you still can??

cheers!

-mnx
More...

Danger, danger, danger!

Take a look up the option chain for April and see the bids! In fact, a few weeks ago, there were bids on the January 80 Calls with the stock barely above 12!! :eek: :eek:

If there are positive results, this stock could really move. When your Febs expire, I wouldn't leave the 25s uncovered.

AZD
 
The key factor with that stock will be the results of their new drug trial. As far as the options are concerned, the date when the results are released is just as important.

With Feb. ATM vol @ 95%, Mar. @ 130%, and April @ 240%, the market seems to believe that the company will not release the results until the American College of Cardiologist conference on March 24.

Many people got burned around the second week of January when they bid up the Jan. options in anticipation that the trial results would be released at the JPM Healthcare conference. As soon as the company reiterated that they were keeping their mouth shut until "the end of the 1st quarter," Jan vol got crushed.

I would expect a lot of volatility between the different monthes volatility between now and March.
 
how would you guys play this thing?

or would you not trade it entirely?

these drug companies are always the ones that either go up 50% or down 50% overnight when results are released...

I was thinking about buying both a put and a call (straddle) and then selling 2 or 3 options FOTM to pay for the call and put purchases...

for April Options...
eg. buy the 10$ call, sell a 20$ call and a 25$ call... break even would be somewhere around $35...

buy the $10 put sell the 7.50 put and the 2.50 put... break even would be ~0$

all of that could be put on for a very small debit...

is that crazy, useless or both?

- mnx
 
I actually like the idea of an OTM long vertical spread. Back in the hype earlier this month, I had a long JAN 20/25 call spread that I paid .10 for when the stock was around $11. This was when those JAN 80's were selling. I figured risking .10 to make 4.90 was worth it, even understanding how unlikely the move would be (in other words, i thought the probability of the stock moving to that level was low, but perhaps still better than 1/49).
 
Quote from mnx:

how would you guys play this thing?

or would you not trade it entirely?

these drug companies are always the ones that either go up 50% or down 50% overnight when results are released...

I was thinking about buying both a put and a call (straddle) and then selling 2 or 3 options FOTM to pay for the call and put purchases...

for April Options...
eg. buy the 10$ call, sell a 20$ call and a 25$ call... break even would be somewhere around $35...

buy the $10 put sell the 7.50 put and the 2.50 put... break even would be ~0$

all of that could be put on for a very small debit...

is that crazy, useless or both?

- mnx
More...

No, it is not crazy or useless.

I had a ratio spread on this thing for January and made out okay.

Figure out what you believe to be the highest it will go, and the lowest it will go, and put on a ratio spread accordingly . . . not advising you to do this, just pointing out an interesting strategy.

Be aware, it could go to the $2 area. The upside is the bigger unknown. I would not feel comfortable capping the upside at 25!

Good luck.

AZD
 
I personally have been putting on ratio butterflies, boxes, butterflies and some calendar spreads. With the spreads so wide in the strikes you can get off great trades. Before a couple of weeks ago you could still borrow stock and do reversals for great prices. Now you have to box things off so you don't get called in. If you are patient things definetly get out of whack where you can take advantage of one strike getting bid up faster than the ones around it.
 
Quote from arizonadreamer:

No, it is not crazy or useless.

I had a ratio spread on this thing for January and made out okay.

Figure out what you believe to be the highest it will go, and the lowest it will go, and put on a ratio spread accordingly . . . not advising you to do this, just pointing out an interesting strategy.

Be aware, it could go to the $2 area. The upside is the bigger unknown. I would not feel comfortable capping the upside at 25!

Good luck.

AZD
More...

Is there any point putting on a ratio spread now? I figure since April is so far away, I might as well wait until a few days before the 23rd of March to take positions...

mnx
 
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