I have 8000 pozn shares and 245 may 10 calls.I am very positive about this one but wanted to ask few veteran longs abou if I should hedge my 8k shares with some puts.thanks in advance.other investments dndn,somx,sqnm,rnn,ymi,yrcw,aig.
Absolutely. Nothing is ever positive with the FDA, and you will be happy that you played it safe if they delay approval. If the stock his 15 bucks by options expiration your calls are worth around 122,000. That makes the cost of the puts look like pocket change.
thanks guys I will at least cover half my investments with puts.thanks a lot guys
any veteran longs please
I am not a veteran to this stock, but having all of your eggs in one basket based on news is really risky. I am currently trying to put together a hedged options strategy myself.If the FDA postpones or rejects, you will get killed on your calls and stock.I would buy some puts at 10 to offset. Just like insurance on your trade.Just my opinion.
personally i think the puts are kinda pricey. I'd rather sell my cost basis and hold the remainder thru the decision... The May 12.5s are $3.30. Thats over $24K to insure your 8,000 sharesThe may 10 is $1.65 which is almost half the cost, but the price has to drop under 8.35 before you have a penny to penny increase in value...To me the $5 is worthless because it probably won't go that low and I feel similar about the cost benefit of the $7.50Anyhow, I'm not buying puts. I bought all my shares around $6.50 and have calls worth 5-7 times what I paid for them. I'll sell out my cost basis next week and let the rest ride.
You are taking an incredible risk with call options and long position, based on a binary event. What if, and there is always a possibility, Vivimo does NOT get approved?Get some out of the money puts as protection against price decline!