SEPR time spread
- Thread starter riskarb
- Start date
Not to belabor this, but how are you protected from a big down move? Because the vol's in your longs will increase while the Mar's go out worthless? And are "guts" deep ITM's? I appreciate the insight. It beats poring over Natenberg.
Yeah, agree, good point commisso. Midcap biotechs never gap on FDA approvals, never! LOL. In fact, I see it as negative. I mean, if this drug gets approved and they actually become a profitable company, they might be liable for corporate income taxes and that could really hurt the stock. LOL. Thanks for the good laugh.
Bro, what are you even saying? I didn't say the news was a non-event or that the stock isn't going to gap one way or the other -- I simply agreed with Arb's assesment that 10% of the float short is not enough to warrant a "massive squeeze". A massive squeezae is what occurs when a thin stock has 56.7% of its float short, gaps open to nh's, proceeds to run up from 52 to 67 intraday and flip its float in one session on no big news, like TASR just did a few weeks ago.
Why your babbling on about the other shit is beyond me. Don't let your dislike of me cause you to get all emotional and spout non-sense. Calm down next time and think about what your posting before you hit the send button.
I'm long the 20 calls and the 40 puts. It's like a straddle only it has a minimum value of 20 pts. The value of the straddle can not be less then 20 pts. By buying the DITM options, they have very little juice on them. That was a big concern for me. Because I believe vol will come in very hard after the news. I also have a 1 x 4 ratio which is aggressive. But that was my call and I'm willingly to live it.
Because of the high vol I sold in March, it takes a lot of risk out of that steep ratio. So as the stock drops, the puts are basically acting like short stock and the long calls will go from behaving like long stock to long OTM options thereby creating short deltas. I hope this explains things.
I hate to say this Commisso, but 10% is a pretty big short if a stock gaps. No, 10% is not a big deal if your talking about a strong stock like say TASR that just keeps going up. When stocks gap, and I know you know this, short positions are sometimes covered at the market by brokers who have clients that can't meet margin calls. So it's very different then say a stock that just keeps going higher.
I have no dislike for you commisso, I am trying to be civil on this board and I have no reason to attack you. Your some kid in NJ on a message board. I wish you all the best. But for you to say that a float that is 10% short is not a big deal on a price gap, well that is very funny. Take a look at RMBS last week, 5% of the float was short. Normally not a big deal, but on news, large short floats are always big deals.
I know you know this, which makes me wonder why you even bother to say anything to the contrary.
What happened to RMBS had alot less to due with the % of shares short then it did with the fact that obviously not many people expected the ruling to come in favor of them. If they had, then the event would have been priced in better going into the ruling. It shows a real lack of understanding when traders see a stock up big and say "hey look at that squeeze!", in most cases its not a squeeze at all, not a function of short-term supply/demand but simply a rebalancing of perception based on some outside event that changes the fundamental outlook of the stock going foward.
The move that this stock makes will more than likely not be a function of a short-squeeze, as squeezes are typicaly set in motion by "shock-events", but will come down to how the current participants have set the odds of approval vs. dissaproval.
Anyway I'm really just talking out of my ass here. I really don't know shit about this game, short squeezes, FDA approvals, etc etc. I just don't like ya and wanted to throw you a jab.
Being that Arb is in this play I will root for ya Mav, after that I wish you nothing but losses for eternity. I hope the suffering these losses perpetuate is legendary. Like legendary even in hell legendary
Quote from Virtuoso:
What happened to RMBS had alot less to due with the % of shares short then it did with the fact that obviously not many people expected the ruling to come in favor of them. If they had, then the event would have been priced in better going into the ruling. It shows a real lack of understanding when traders see a stock up big and say "hey look at that squeeze!", in most cases its not a squeeze at all, not a function of short-term supply/demand but simply a rebalancing of perception based on some outside event that changes the fundamental outlook of the stock going forward.
The move that this stock makes will more than likely not be a function of a short-squeeze, as squeezes are typically set in motion by "shock-events", but will come down to how the current participants have set the odds of approval vs. disapproval.
Anyway I'm really just talking out of my ass here. I really don't know shit about this game, short squeezes, FDA approvals, etc etc. I just don't like ya and wanted to throw you a jab.
Being that Arb is in this play I will root for ya Mav, after that I wish you nothing but losses for eternity. I hope the suffering these losses perpetuate is legendary. Like legendary even in hell legendary
OK, I think we are in agreement here. I am not saying that the up move in SEPR or the upmove in RMBS was because of the short float but rather the shorts tend to exasperate the move. For example, say RMBS was going to open up 5 to 7 pts on that court ruling, I'm sure a good part of that last 5 pts was in part due to shorts covering at the market on the open. In other words if there was not a single share short in RMBS, perhaps it may have only opened up 6 to 8 pts instead 12? Can we agree on that.
I am saying the same thing with SEPR. I think if there was nobody short and the stock had a conditional approval, which is not as exciting, perhaps the stock would open at 32 or 33, but with the shorts coming in to cover on the open, maybe, maybe the stock opens at 35 to 37 because of that. That is all I am saying.
I mean come on, I know this is a nasdaq stock, but let's say it was a listed stock, and you are a specialist, wouldn't you want to open the stock at the highest point possible knowing that the shorts would be coming in to buy at the market? Then you could get short and buy back the stock 5 pts lower. I mean why wouldn't you do that? All I'm saying is that the market makers on the nasdaq have a vested interest to take as much money from the shorts as humanly possible. Capitalism at work here.
I'm happy to have your support on this trade. As for the rest of my trades, well, if they don't work out and you have doomed me to losses then it's only fair that you let me trade with you and your uncle's money. LOL. Maybe Pabst can come along too. Share the wealth!
