The successful VX-661 scenario was already priced... but not priced in. At this stage, the approximately market price is in the 80's. Don't be nuanced by pipe dreams or short dreams. The price is where it is for a reason with this much institutional ownership. Deal with it and adjust your portfolios accordingly.
Myself - this morning I moved my profits into some other biotechs and bought conservative positions in INTC, GE, and F.
For now I am out. I will still check the boards every few days and watch the chart for a good buying opportunity. For the time being, there are some catalyst opportunities elsewhere that are more immediately profitable. Long term, Vertex still has more room to run so I will be entering back in at some point.
Thank you Third, Verity, Qdelfen, and others for being legitimate contributors to this board.
I hope you do well. I am not expecting Ford to ramp up till Europe turns which I don't believe will happen until next summer. In the interim, Ford is paying a dividend, and I am very happy with the progress they are making in India and now even China. My expectation is that Ford will be in the $16 to $18 range by end of year, I hope your break even is higher. If not, you may want to get margin approval and sell the $20's with a monthly spread to reduce your cost basis by year end. My long term (2-3 years) target is around $30. At that point, I will be looking to trim and move money elsewhere. There is also a lot of developments with transportation technologies, but I won't get into that here. This is after all the Vertex board. Good luck.
JF, you deserve my congratulations for having locked in a 800% gain (for a short time span). Your posts indicated that you have vast knowledge of options. I rarely buy call options, but instead sell put options. The profits are bound by the premium, but has the advantage that you can buy the shares cheaply when the stock price closes below the striking price of the put option at expiration. I buy most biotech stocks by selling in-the-money puts. Most biotechs have huge premiums for puts, and you gain the premium if the put expires worthless as you know better than I do. I have sold total hundred contracts of out-of-money Vertex put options of all months. I might be able to buy more VRTX shares. Good luck to you.
Thank you Third. I would not have gained that without your sage counsel. If only these message boards had more like you. That said, I am only as good as the books I read, practice, and a little luck.
I agree on your strategy too. I think what a lot of people miss is that when we have an appropriately discounted analysis of an issue, and we reach that price in market, we have already earned the future revenue. Which, if one can recognize that and sell the premium above it, it is akin to taking fake money and making it real. I have made consistently around a 1/4% to some times as high as 2% a month on dividend stocks I own writing covered calls.
The naked puts you describe are also a good strategy when the market or sector is hot. I can determine the price I want to enter in at, sell the option, and if it gets called, I own it at my price target, if not, I get the premium. Just as you were saying. Which is right in line with the teachings of Warren Buffet and Graham Dodd... it is all about the price you pay. The only caveat with biotechs is that I would limit my downside by using a vertical spread around expected binary events.
Specifically regarding Vertex, there is a reason (market) for selling puts. All of the put buyers on this board are claiming that they are going to get rich, the price is falling to $30, blah, blah, blah. Who is selling the put? Why are they taking on that risk? Are the options writers altruistic and looking to give away easy money? It is for precisely the reasons you describe... if the stock falls, these writers want it at that price because of the CF franchise (my opinion). If not, they are willing to make money selling people insurance and buy the shares anyway... because there is also a buyer on the other side of every short sale.
Best regards ~ JF
Sentiment: Strong Buy
Price pays. If it were going to tank, it already wuld have. I am sorry, I am short, a very tiny position, and I am losing. Institutions are trading the stock, not the avg. retail trader. The institutions are not going to let it come down, and nobody has the money to fight them. That is why shorting a stock with a 95% institutionally controlled floar is a very dangerous short indeed. They have their own traders, and they are trained to support the price.
Best, if you look at the previous gap up you will notice that it too filled like 90% of other gaps. It took 7 months to do so but it filled. I dont have anything against the company itself. Only the gap. It will fill. I was telling a friend of mine that wanted to buy AAPL in the $600 to wait until the gap filled at $420. He wouldnt listen. He bought a ton at $550 even though I kept saying gap will fill you will get a much better price. well when it dropped through $500 he strated buying on margin. It ruined him when it drop back to 420 and then through 400. Regardless, good luck in your trades.