Hey guys, ws mentioned a strategy in another thread about a trade with POZN. Buying the stock, selling the call and buying an OTM put. I was looking at this a little closer. Last covered call i did had no protection (ENCY).
I like this POZN Sept 17.50 call @ 4.10 but not sure what put to buy. Was looking at the 15 @ 2.50.
By my math the most I can lose is $97.00 per collar and most I can gain is $153.00.
1 sept 15 Put long
1 sept 17.50 Call short
100 POZN shares long
Debit $1597
I based it off of 17.57per share x 100 for $1757 debit and credit of 410 for cost basis of 13.47 for the covered position and debit of 250 for put to bring total cost basis up to 15.97 with with short 17.50 call and long 15.00 puts.
Of course I would do more than 1 collar but does this look right? Suggestions?
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Hey guys, ws mentioned a strategy in another thread about a trade with POZN. Buying the stock, selling the call and buying an OTM put. I was looking at this a little closer. Last covered call i did had no protection (ENCY).
I like this POZN Sept 17.50 call @ 4.10 but not sure what put to buy. Was looking at the 15 @ 2.50.
By my math the most I can lose is $97.00 per collar and most I can gain is $153.00.
1 sept 15 Put long
1 sept 17.50 Call short
100 POZN shares long
Debit $1597
I based it off of 17.57per share x 100 for $1757 debit and credit of 410 for cost basis of 13.47 for the covered position and debit of 250 for put to bring total cost basis up to 15.97 with with short 17.50 call and long 15.00 puts.
Of course I would do more than 1 collar but does this look right? Suggestions?
There is a GREAT value in the Sept options compared to the August..much more premium in the Augusts..so if I were trying to figure it out, why go longer to Sept selling when it isnt paying off?
I would try to work out the August calls..
As for my thinking I thought the 12.50s were the better hedge..think of this..the 17.50s are going for 3.60, which means your basis is about 14 on the stock. The 12.50 puts are 1.35 or so and the difference would run you about 3 bucks..meaning your basis is 14 on the stock after the CC sale, and 12.50 puts minus 1.35 means 11.15 or so is where your break even is on the puts (strike minus cost) so your basis is 14, your break even on the puts are 11.15, difference of less than 3 bucks or about a 15-17% stop loss so to speak.
Your upside is 2.30 per share capped..downside is 3 per share, and more if the stock sells below 11..
I see literally zero reason to sell CCs outside August..none at all.
Buying the 15 put makes more sense with selling the 20 strike CC..
Selling the 20 CC nets you 2.30, basis is 15.20, upside now capped at 4.80 (2.50 on difference between 20 strike and buying at 17.50, plus the premium of 2.30 on the CC) less the 15 put costing 2.40 equals 2.40 or a 15% return.
Downside is Strike minus premium which equals 12.60 subtracted from basis on the CC which is 15.20 equals 2.60 or about a 15% loss.
I dont see much reason to choose one over the other..one gives you 2.30 one gives you 2.40 on the gain, one gives you a 2.60 loss, one gives you a 3 buck max loss.
The only potential benefit of selling the 20 call is if the stock hangs around 20 and not above, you keep the premium and the calls expire, and you sell the stock or sell calls for another round....
Me thinks the stock will be outside the boundaries of 13 or 20 though..
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Grinder,
There is a GREAT value in the Sept options compared to the August..much more premium in the Augusts..so if I were trying to figure it out, why go longer to Sept selling when it isnt paying off?
I would try to work out the August calls..
As for my thinking I thought the 12.50s were the better hedge..think of this..the 17.50s are going for 3.60, which means your basis is about 14 on the stock. The 12.50 puts are 1.35 or so and the difference would run you about 3 bucks..meaning your basis is 14 on the stock after the CC sale, and 12.50 puts minus 1.35 means 11.15 or so is where your break even is on the puts (strike minus cost) so your basis is 14, your break even on the puts are 11.15, difference of less than 3 bucks or about a 15-17% stop loss so to speak.
Your upside is 2.30 per share capped..downside is 3 per share, and more if the stock sells below 11..
I see literally zero reason to sell CCs outside August..none at all.
Buying the 15 put makes more sense with selling the 20 strike CC..
Selling the 20 CC nets you 2.30, basis is 15.20, upside now capped at 4.80 (2.50 on difference between 20 strike and buying at 17.50, plus the premium of 2.30 on the CC) less the 15 put costing 2.40 equals 2.40 or a 15% return.
Downside is Strike minus premium which equals 12.60 subtracted from basis on the CC which is 15.20 equals 2.60 or about a 15% loss.
I dont see much reason to choose one over the other..one gives you 2.30 one gives you 2.40 on the gain, one gives you a 2.60 loss, one gives you a 3 buck max loss.
The only potential benefit of selling the 20 call is if the stock hangs around 20 and not above, you keep the premium and the calls expire, and you sell the stock or sell calls for another round....
Me thinks the stock will be outside the boundaries of 13 or 20 though..
Thanks for your thoughts. I agree about the august calls better for the seller. Im so used to being the buyer and saw the better value in the september.
So basically it seems to me that if I do 4 collars i'm either gonna make a little over 1k or lose a little over 1k.
I guess the hardest thing now it trying to time all the pieces out. I think I should buy the stock first and wait for the bump the few days before fda, then sell calls and buy the puts. Kind of risky to do it that way but seems to make sense to me seeing how the other bio's follow this pattern.
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Thanks for your thoughts. I agree about the august calls better for the seller. Im so used to being the buyer and saw the better value in the september.
So basically it seems to me that if I do 4 collars i'm either gonna make a little over 1k or lose a little over 1k.
I guess the hardest thing now it trying to time all the pieces out. I think I should buy the stock first and wait for the bump the few days before fda, then sell calls and buy the puts. Kind of risky to do it that way but seems to make sense to me seeing how the other bio's follow this pattern.
I bought the stock at 17.20 and it makes it so I can sell the CCs and make some juice on the stock as well.
If the stock does move towards 19 or so then the 20s will get juicier and you COULD sell the 15s or the 17.50s for similar pricing as we are talking about.
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Grinder,
Correct.
I bought the stock at 17.20 and it makes it so I can sell the CCs and make some juice on the stock as well.
If the stock does move towards 19 or so then the 20s will get juicier and you COULD sell the 15s or the 17.50s for similar pricing as we are talking about.
Trying to confirm august 1st as the fda approval day. Before bell, during day, after bell. I'm getting my shares tomorrow but want to know how late I can hold off on selling the calls and buying the puts. I checked pozn website with no luck.
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Trying to confirm august 1st as the fda approval day. Before bell, during day, after bell. I'm getting my shares tomorrow but want to know how late I can hold off on selling the calls and buying the puts. I checked pozn website with no luck.
Nobody knows including the company. It probably happens at some point on the 1st, in the case of DNDN they halted the stock on the day until the report..
If you bot Mon you probably could safely wait until Tues....but you never know..it could happen at any minute, just on or before the 1st.
I know accventures is in the stock..
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Grinder,
Nobody knows including the company. It probably happens at some point on the 1st, in the case of DNDN they halted the stock on the day until the report..
If you bot Mon you probably could safely wait until Tues....but you never know..it could happen at any minute, just on or before the 1st.
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