option strategy needed on FDA approval drug stock

Quote from xflat2186:

If the stock goes down on the news the premium will be out of the calls you own before you could sell them. If the stock rallied you'll need to be quick to sell also as volatility will get crushed. You need a couple hundred % move
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The stock is up about 56% this week on huge volume in the stock and the options. My calls are profitable but I am inclined to think we could see $10 - $12 pre-approval. I will be selling some before the scheduled FDA ruling - early rulings are also a possibility.

I think I will sit tight for a bit and see what develops.
 
Quote from 123golfer:

The stock is up about 56% this week on huge volume in the stock and the options. My calls are profitable but I am inclined to think we could see $10 - $12 pre-approval. I will be selling some before the scheduled FDA ruling - early rulings are also a possibility.

I think I will sit tight for a bit and see what develops.
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I would suggest for your consideration that if you get nicely ahead on your $5 calls before the announcement that you pull some money off the table (hopefully your initial cost). You could close some of the $5 calls, roll some to $7.50 or create some verticals by selling some $10 (my preference) or $12.50 calls. You could even by some further OTM calls as a good news lottery ticket.

IMHO, it's never a bad idea to accept making a little less to the upside while pulling out the seed money so that if you get a negative early announcement, you don't lose. The more DNDN rises, the more I would shift toward locking in profits.

Like last time, I will trade the momentum upon the news.

Good luck!
 
Quote from spindr0:

I would suggest for your consideration that if you get nicely ahead on your $5 calls before the announcement that you pull some money off the table (hopefully your initial cost). You could close some of the $5 calls, roll some to $7.50 or create some verticals by selling some $10 (my preference) or $12.50 calls. You could even by some further OTM calls as a good news lottery ticket.

IMHO, it's never a bad idea to accept making a little less to the upside while pulling out the seed money so that if you get a negative early announcement, you don't lose. The more DNDN rises, the more I would shift toward locking in profits.

Like last time, I will trade the momentum upon the news.

Good luck!
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How about the action friday?? 22 million shares and a high of $6.60. This is a real rodeo stock. I still think $10-12 before any press release is very likely. With all this interest it seems to feed on it's self. Per your advice - I will be pulling the trigger on some options in the near future.
I have more more than a double and would like to ride half of the position all the way to see if the lottery ticket hits. I think approval means $25-$30.
 
You have to decide whether fear or greed drives you more. If I had a double in a pending news stock, I'd be locking some of that in now. Things I'd be looking at would be to:

1) Sell some May 5 calls and book a profit (at least enough to recover the initial option premium laid out)

2) Sell some May 5 calls and buy some May 10 calls (roll). Since you own the 7-1/2's, you put almost a dollar in your pocket and still have near price and lottery ticket potential.

3) Sell some May 10 or 12-1/2 calls, turning some of your long calls into spreads.

4) Sell some May 5 calls and buy some 10/12.5 or 10/15 bullish call spreads, booking some gain and still having a 5 pt. lottery ticket spread working for you.

The question I'd be asking myself would be "How bad would I feel if the stock amd/or option premiums collapsed tomorrow?" Personally, losing a current double would bother me a lot more than booking some of it now and losing 1/8 or 1/4 of a bigger upside. But that's just me. You have to make and live with your decisions,

Good luck!
 
Quote from JJacksET4:

Looks like those May calls payed off pretty darn good today!

Hope you still had them

Congratulations if you did!

JJacksET4
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Hello

Talk about crazy- I was very nervous and going to sell half the day before,but luckily did not. I could not sleep and got up in the middle of the night and saw the announcement was set for the next day and I could not trade. Needless to say I almost pissed myself when I heard the news on CNBC. I went to work the next day and sold most of it right away- ended up getting about 10 to 1 return.
I am a small trader so this is a big deal to me - took an afternoon off and bonded with a bottle of Johnny Walker. I stiil feel pretty stupid about not selling half sooner but dumb luck paid off this time.

Thanks for the response.
 
LOL. I know that feeling of getting good news the night before and then being unable to sleep for more than an hour at a time, continually looking at the clock to see if it's time to get up. Of course, the fact that it was dark out might have been a tell (g). It's a mix of "It's going to be a good day" versus "Something is going to screw this up for me!".

Don't second guess yourself about hindsight. A trade is a trade is a ... etc, and if you don't trade the issue regularly, just pocket the money, delete the symbol and move on. There's no payoff in festering over what ifs.

Congrats on the fine job!
 
Quote from spindr0:

LOL. I know that feeling of getting good news the night before and then being unable to sleep for more than an hour at a time, continually looking at the clock to see if it's time to get up. Of course, the fact that it was dark out might have been a tell (g). It's a mix of "It's going to be a good day" versus "Something is going to screw this up for me!".

Don't second guess yourself about hindsight. A trade is a trade is a ... etc, and if you don't trade the issue regularly, just pocket the money, delete the symbol and move on. There's no payoff in festering over what ifs.

Congrats on the fine job!
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Thank you for the response and could you please give me an opinion on my latest trade? I took some of the proceeds and bought may 19 calls and june 25 calls. The final numbers from the study will be presented at the AUA conference on the 28th.
There is a lot of hype and the expectation is that they will come in well above the 22% FDA requirement for approval. The stock moved up $3 last week and I feel it could jump to $30 on the news.
OTHER BULLISH CONSIDERATIONS
There is also a site called "care to live" that is trying to push the FDA for early approval.

DNDN is also working on the same product for breast cancer.

There is talk of picking up a european partner and an asian partner for their respective markets.

Of course there is the ever common take over rumor.

A huge short interest is still outstanding.


If it makes the move to that $30 area , I will liquidate and roll some of the proceeds into the November 40 calls.

Any thoughts??
 
still holding some naked short 30C on dndn, the premium was just too good.

But it's making me very nervous, i am closing it first thing monday morning, before the madness on tuesday begins. God knows what will happen on tuesday, i predict complete chaos.
 
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