-by @scottnations
-by me to @scottnations close the May call spread you recommended on air? $VVUS
-scotts reply @marklexus Yes, close May call spread. Knew April was too short, thought May was long enough. Not so much.
scotts spread can be closed for about 2.20 at time of this post so will give him credit for that. trade again was:
Buy the May 21/30 call spread for $3.00
closed today for 2.20
loss of .80 per lot -- here is an updated spreadsheet of all the OptionsActionTrades im tracking Spreadsheet in GoogleDocs
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9apr - after hours today i saw that the ruling for their fat boy drug has been delayed until july 17, below is my original post.. i highlighted at the bottom what i posted about only putting this on right before the old apr17 decision day.. what happened today is a perfect reason for doing that. now IV will get crushed and scotts trade will likely lose since the event causing the IV rise is delayed. stock is down under 21 after hours.. i hope scott comes on-air/twitter to suggest closing his trade to salvage the remaining premium since im sure at least one person put on the trade.
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mar30,2012 - on the options action web extra scott gave an explanation about some options and a trade. i agree with him that when putting on a trade to pick a direction.. who knows what will happen with this new fat boy drug ruling on apr17. here is the link to the video .. Options Action web extra
he mentioned the:
Buy the May 21 call for 4.50
sell the may 30 call for 1.50
debit for call spread is $3.00 ($300)
here are my assumption.. that i have no clue what will happen AND that whatever will happen will be on schedule for prior to apr opex. basically a guess..could go up could go down.. but scott is willing to commit $300 per one-lot for this guess.. risking $300 to make $600. so if i have to guess i will guess up move but also guess that the option market has it priced just right.. stock at about 22 today. At-the-money options are pricing in about a $7.50 move..gets us to about $30.. so if i am going to guess with $300 i will do this instead:
Buy the Apr 27/30/33 call butterfly
.. bid/ask is .14/.45 so i would enter limit order and try to get for .30 , maybe nudge up a penny or few to get filled if nothing happened. for a 10lot .30fill ($300) my max profit at 30share price is $2700 instead..but realistically might get a 3x-5x return the next day if its on the button. maybe only do a 5lot to lower cost to $150.
If i was going to enter this trade i would wait until the day prior to the announcement scheduled for 17apr.. to base my strikes on where ever the stock was at this time.
Bottom line i have no idea what can happen and would be guessing.. which is not my style..but if you are going to guess...guess cheap.
