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Affymax, Inc. (AFFY) Message Board

  • l0410z l0410z Mar 27, 2013 4:21 PM Flag

    Risk/Reward looks attractive

    I think this stock will recover when the investigation is over. I own 4000 share purchased at 1.37 protected by Oct 1 puts (purchased at .25) and I own 40 Oct 1 calls purchased at .6 Though currently in the red, the risk/reward is well worth it to me. I have a 60 cents downside on the stock I own and a 60 cent downside of the calls. I think the upside is well over 60 cents on both.

    Sentiment: Buy

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    • It appears that the company has 100M in cash or securities which is almost twice the current value of the company. This limits the risk even more. We will see.

      Sentiment: Buy

    • I agree with you. Shorting or going long are opposite sides of the same coin. Shorting is not personal and a viable strategy. The upside on a short at this point is $1.24 if the stock goes to zero. It can very well do that if they declare bankruptcy. They reduced their staff significantly to preserve capital. Assuming they have enough capital or can borrow from partner, this can have a 3 to 10 times appreciation.

      From the announcement "data from post-marketing studies revealed that hypersensitivity reactions were observed in approximately 0.2% of the patients receiving Omontys and approximately one-third of these patients experienced severe reactions, necessitating immediate medical care and even hospitalization". That is 20 people per 10,000 and 7 requiring immediate attention. This may just be a label change mentioning the risk.

      I am not sure what will happen but this is not the stock to short. The reward is not in your favor. It is either a stay in for the ride or take your loses and move on.

      Sentiment: Strong Buy

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