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MELA Sciences, Inc. Message Board

  • C78596998785 C78596998785 Apr 9, 2011 10:40 AM Flag

    options

    I have been amused by the prices bid for the call options out in July. I own 130 2 call contracts and the bid isless than the intrinsic value of the stock... I had placed a sell just above intrinsic and it did not execute... so looks like time to call in the shares. I had intended to sell the options for a 5-10 cent premium and buy the shares, but I won't sell less than intrinsic so looks like I will call in the shares and sell some subset of covered calls...
    Wondering about others in the sam boat... your thoughts?

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    • Time is playing against you, the reason? Likelihood of the stock trading below the current levels between now and expiry or lack of confidence in holding these levels. If I were you, I would consider paying a few more pennies and rolling forward the trade to Oct. by then EU approval is likely and PDUFA will be known to be late July or early Aug. Worst case Sept. so Oct will be the month to play. Alternatively, call your shares and sell Oct 4 calls but you will miss out on any upside to this stock which is more than likely to get approval in both EU and >70% chance in US. My bet it gets approved.

      • 1 Reply to lukin_for_fun_only
      • You missed on the reason... I am going to take delivery, if the options traded above intrinsic I would sell the option and then buy the shares at market... Want to buy my options for less than the intrinsic.... no thanks I call in the shares and am now able to repeatably sell covered calls out of the money and whittle down my cost basis...

        Either way I consider this a win or lose stock. My cost basis on the $2 calls is $1.23 so My cost basis will be 3.23 and I see this stock dropping on bad news to @ $2 with a rebound to mid $2's almost immeadiately.

        Upside will be 7-8 at least.... originally when I entered this I expected news by end of May so I bought July... Now I'd like to sell the covered calls a few times out of the money and in the 4 to 5 range... I should be easily able to bring my cost basis down to the upper $2's reducing my risk... vs the opportunity to cash out at 7-8 (just need the FDA to hold off as I'd hate to only get a 100% return cause I got called out at $5... Its always about timing in the end...

    • I own some $5 July calls but I now beieve they are a crap shoot. With this 180 day reset from the file amendment date of late Feb, puts us into Aug if it takes the whole six months to review. Dr Gulfo seemed to beieve that it would take that long at the Needham presentation. With the way the friging FDA is dragging this thing out, I would tend to believe that also. Looks like Oct is the safe bet now for either an FDA decision or German approval.

 
MELA
1.20+0.02(+1.69%)Sep 1 4:00 PMEDT