Why is a big $$ player selling $2 million+ of OTM calls here? Because to me, that's what looks like happened with the Jan $12 and the Nov $11 calls this past week. If there was any real upside in this stock left right now, why would they do that?
Usually big $$ doesn't sell calls unless they are very certain they are not going to be on the hook for a price increase. That plus the extreme overbought technical signals, the recent parabolic price rise, and the lack of ability to make further gains at this level, should be a huge warning sign to longs.
Nobody can see the future, and I can't say for 100% certainty that the call activity represented a strong short bet on ONTY, but it certainly looks that way. Aside from the fact that the orders went through near the bid, why would smart money have bought all these super-expensive out of the money calls right after the stock just made a new high? Why wouldn't they have bought them months ago on the cheap?
Anyways, just some food for thought, hopefully some people will read this and dig a little deeper.
Of course, be suspicious of this post, because I have a short position and of course I want people to sell. But also be suspicious of the longs on here rah-rah'ing this thing at this extreme level, and use common sense. Good luck to all, some are going to lose really badly here though most likely.
Still sitting here between 9-9.3. Nothing interesting yet!
I did see some more strange OTM call activity in the last few trading days, wonder if anyone else noticed it as well.
Also, looking at the latest N-CSR for TFS Capital Investment Trust, a large mutual fund, it looks like they went from a 32,991 share long position in ONTY at the end of 2010 to a 103,909 share short position by the end of the last quarter.
LOL, that's a good point. I certainly wouldn't ever go all in with any position, let alone a short position on a stock that is rising parabolically. That said, nearly every time there is a parabolic upward move, followed by the type of action we have seen here (blow-off top), stagnation, massive selling is very likely to follow. There's always a "story" as to why this time it's different, in this case it is the medical knowledge you speak about. And I fully admit you could be right. But 9/10 times or probably more often (just try to ignore the all-caps for a moment and actually check out Harold's posting history) these things end badly. And there is always a group of die-hard longs insisting that the shorts don't know this particular story or stock well enough. Will definitely be interesting to see what happens over the next week or so, though, looking at the MACD this thing could get ugly very soon. But, if I lose on my short position and this company cures cancer, that would be fine with me. I just don't think it's going to happen in the next few weeks.
Well, barnard, IMO the most likely seller of those $13 calls is one of the early PIPE buyers, who are sitting on tons of shares. If so, it would be a rather conservative hedge, offering some downside protection while leaving lots of runway for further PPS increases.
If the seller were a true short, then why sell calls that are so far out of the money? If you really thought there was no good news in ONTY's future, why not sell $10 calls for a much better premium? Makes no sense.
But if these are covered calls, the sale makes lots of sense. The holder of shares still gets all the appreciation between $9 and $13 and in addition gets the $2 call premium. Pretty smart, esp. if the seller has not sold calls on all of his/her shares.
No cigar for you. But thanks for playing.
The PIPE holders is actually the most plausible scenario for the selling of out of the money calls. One of the basic rules of call selling, is to enter an order at which you wouldn't mind selling the stock. If I were a PIPE or warrant holder and had a ton of shares, I wouldn't mind picking up the strike price plus the premium. I would have purchased the stock for a reason, and wouldn't mind holding it. If the timeline triggering a significant event happened to stretch beyond the expiration date, then I would pick up a nice chnk of income. Selling covered calls is not necessarily an extreme bearish play, it may just be a way to generate income depending on your time projections.
Barnard, yours is a perfect description of the ONTY battlefield. You freely admit what is true of all shorts. You have only one tool in your short selling tool box, reading a chart.
My knowledge of your adversaries (longs), well... in the case of ONTY... there are well capitalized entities with clear knowledge of medical practice, research, biotech and especially biostatistics. You may be very sophisticated with interpreting "parabolic" price charts, calls and puts. Before you go all in with your short position, it might be wise to take a look at the stage IIIb subset of Stimuvax phase 2 data. If it's too complicated or distant from your realm of knowledge, just drop the study on the desk of anyone with PhD. level biostatistics qualification. Tell them it's now been many years and a median survival still can't be calculated in the safety evaluation for certain Stimuvax recipients because... well... >50% are still surviving despite initially presenting with non-resectable disease.
With biostatistics there are certain predictable outcomes. Many understand how favorably this will likely end for ONTY shareholders and more importantly, NSCLC patients.
The only, truly identifiable risks to the current and ultimate PPS are dilution and another encephalitis scare, not some short selling, 2 million dollar "Boogey-man".
IMHO, of course. GLTA