July 13' $5 Calls for .30 -.40 Cents -- A Steal, IMO
Example: 100 long calls for $3K - $4K of risk exposure is a really smart play, IMO; especially, in a binary scenario. If approval of ANY kind is announced next month, in all likelihood, the stock will trade in the $5.50 - $6.50 range; that is a forecast based on a simple, historical pricing model.
Please complete your own DD. This is a good strategy for those who want to go long, but are worried about losing a significant portion of their capital outlay, in the event things do not pan out.
As with ALL investments, options carry their own risks, so please trade within your individual risk tolerance parameters.
Personally I think the March $4 calls for $0.30 are a better deal. First, they are a dollar cheaper to call and second they are after the PDUFA. The gamble is the approval. It wont matter that much if you call Feb 25th or July 25th. We'll know if this baby is going to sink or float in a month.
Personally, I think DVAX gets approval. I listened to the Adcom and believe that what the market heard (i.e., safety profile not good) was a misrepresentation of what was actually said (i.e., could have better racial mix up, but safe, effective and huge study).
Thus, I think the $4 March calls for $0.30 are a steal. Approval comes and this thing is going to be well above $4.30.
Sage advice, mnkd4mnkd; I appreciate your insightful thoughts. I owned this stock at $4.54, experienced significant losses in November when it plummeted to $2.22, but recouped some of my money on the recent rebound. I am considering accumulating more shares during this recent dip before the PDUFA (Prescription Drug User Fee Act) decison on February 24, 2013. I think this is an exciting time for DVAX longs!