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American Capital Agency Corp. Message Board

  • divhunt44 divhunt44 Mar 6, 2013 5:06 PM Flag

    BMY Cost Average Double Down

    I may lose big on this one.. Today i doubled down on the BMY March & April 37 Puts. Avg cost for March .41 Avg cost for April 37 Puts .65.. Will have to wait and see what happens. Usually, i only bet 10 % of my total portfolio on options, now I'm a little over that! Xion - where are you at with this trade? I think you had the $36
    Most of these i bought back in January, so it wasn't just a short term play.. but time is sure running out now, with only a little over a week to go. I'll let everyone know how i make out on the March & next month on the April puts. I've only did this double down, once before & it saved my butt.. What happens this time?
    Hoping for Dow sell off . South 400 points between now and next week. And Bmy falls off the cliff!
    Wish me luck...

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    • Hey Divhunt44,

      I made the same mistake back in Jan with the Long BMY Puts. I exited for a loss back in Jan. It will go down in my history book for my last Long Put purchase(almost 80% of the time a losing proposition).Look back over the last two years and see post EX 13 trading days(Apr OPEX), how the PPS of BMY has performed. That's right! It has either stayed the same as the DBEX or higher baring one Q.. So if you are holding Puts NOW, when we are on the last three weeks B4 EX, when we typically have the run to early April EX, AND the PPS historically 80+% of the time stays the same as the DBEX, then it is not a good thing.

      I don't get it. You are still buying Puts?? Yes BMY is high but it is the time for the run right now. I see a possible 40.00 by the DBEX, with a drift down to maybe 38+ at April OPEX. But I am just saying, historically what the PPS does and it might turn out OK for you. Here's what I would do if I were advice. We will probably get a pull back to 37.00. Roll half your Long Puts to Long Apr37Calls at that time. That way you have a straddle, and can play both sides as we approach the EX date. Are you seriously betting that BMY will not move up to EX. You are betting against 90% odds! Pretty stiff odds, historically.

      When was the last time BMY traded lower on the DBEX from three weeks out? That's right Oct 2008, 22 quarters ago....stiff odds. Roll at least some of those to a straddle and play the higher odds or don't. You might get the 1 out of 28 long shot, what do I know...;-)



      • 1 Reply to reits_r_us
      • Thanks Doc for the words of wisdom.. if you are correct and BMY goes down to $37.00 or a little lower, lets say $36.70. I will follow your suggestion and roll over the March puts into April calls. I still have 6 days for that to happen. By doing a double down with the March puts, at least i still have a chance to avoid a large loss. As i said, it has worked before for me. Lowered my cost to .41.
        I'm still hopeful the April 37 puts also save my butt. I rely on the charts. Going back 2 years, on the charts, i see big down moves, 3 to 4 points down.. that is what i was playing back in Jan and Feb when i bought these puts. Usually it takes 6 weeks or so after x div to drop by 3 points, so i will be looking at the June puts to continue on with my thoughts that this stock will drop soon after x div.
        Recent news says - BMY major patents expire. Plavix for one. Baraclude for another. These are major hits to revenue. Add to that, this market is about ready to take a down slide / correction.
        Look at the chart & the major down moves in Bmy. History should repeat. It's just a matter of when this put trade will pay off. If this run goes to $38.50 then I'll purchase the June puts, because i will need that 6 to 8 week down trend that the charts suggest. I'm losing big now, but will try to turn it around. Thanks again for your help.. Rich

    • newport_beach_dreamin newport_beach_dreamin Mar 12, 2013 12:20 AM Flag


    • I expect the DOW party to last a while . The fresh money is not all in yet. Hope you are a gambling man.

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