ITMN option expensive

Quote from Informed:

Suggest short May at money straddles to take advantage of the high premiums. I predict FDA will approve, but the share price won't move above 50.

Target price

Approval 50 (50%)
Approval with tough restriction or post approval study 45 (25%)
Request more data but no more new trial 38 or other delay (20%)
More data new trial 22 (5%)
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You forgot one outcome on your %'s above LOL

Hope you didnt follow your own advice.

If I were you I would lay off the predictions for a while till your crystal ball clears up.
 
Quote from highseas:

Interestingly, there was not a huge volatility crush. IV dropped, but not by nearly as much as I would have expected.

That could potentially bode well in the sense that people have hopes that it might go up. In fact, when I pull up the OTM IV graph I see a big "U" shape indicating that the IV for calls are quite high.

I took some losses by reducing my $15 puts, but am keeping the rest for now.
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Looking at the VOLA charts the vols too a beating today. Dont waste your time looking at the implied volatility in a call trading at 4 cents.
 
This stock got absolutely rocked on this news. The sad part to me is that alot of the people that were holding were sitting on fairly significant gains already, because i think most people got in between $10-$20 in anticipation of FDA approval.

What I can't for the life of me understand is WHY DIDN"T ANYONE PROTECT THEIR POSITION!?!?

As an example:

The stock was at $45 the day before the news was due to come out. All option prices I'm quoting are closing prices on the day before the news.

Why the hell wouldn't you put a collar on something like this, give yourself some (MORE) upside gain while protecting the profits you already made:

assume you were late to the party and didn't get in the stock till $20 you're still sitting on a double.

additionally assume you expect a 25% move either way.

SELL the MAY $55 Call for $4.75 (55 call is 22% increase from 45)
BUY the MAY $35 PUT for $5.80 (35 put is 22% decrease from 45)

So for $1.05 you can protect your stock and either participate in an additional 22% gain or cover your ass and still lock in $15 of gains from your initial investment.

I just can't understand the gambling mentality of letting huge gains ride on something like an FDA decision. maybe this will prove helpful to people the next time they try to invest in a biomed FDA play.

Best of luck to all trades, may the $$ be with you!!
Happy Trading
 
Quote from Shhhhh:

... What I can't for the life of me understand is WHY DIDN"T ANYONE PROTECT THEIR POSITION!?!?0 ...
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I guess the volatility was pushed up by the people who were buying puts to protect themselves ... :)
- unInformed :)
 
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