Appx iv
- Thread starter nbbo
- Start date
Quote from nbbo:
Why is the IV so high on these options? I know I am missing something (ie - no free lunch). The only thing I see is that they are presenting at a B of A conference on expiration Friday. Any thoughts?
Thanks
Nbbo
They are awaiting to hear from the FDA any day now regarding their cancer drug Abraxane. This thing is far from a free lunch.
Ran a front month calendar and got a 40% edge in IV. Breakeven points are27/55 and vega implosion of around 20% down. Anything above those position will start to lose money. AM I missing something ? I think the IV diff is so huge that it might be worth it. I got 150 vs. 100% between May and June. Any thoughts.?
From what I have read from reports, some analysts are expecting a $70 to $80 stock price on FDA approval. Based on price action of previous stocks seeking FDA approval on cancer drugs, this seems very typical. I think the old stock doubles on good news and gets cut in half on bad news applies here. If I had to take a wild guess, I would say those options are seriously underpriced as they usually are. Having said that, I might just sell some premium and take some long stock but in very very small size. LOL.
There are a few other ways I might play it as well. But be warned, this stock really is a gamble.