Yesterday, I noted that the two stocks which I consider bellwethers of this category, and which had been forging relentlessly upward, CELG and GILD, had dropped a bit ...out of sync with the overall strength in biotechs. Today they dropped sharply at the open, as did ONXX and others, amidst heavy options action. (or at least in the case of ONXX, comparatively heavy options action) Interestingly, the companies which might be expected to have actual product sales to report this quarter, such as GILD, ONXX, MEDVN, and CELG, dropped most precipitously. Those which have only prospects, such as PCYC and CLDX, have hardly suffered at all. This suggests to me that some large holders are buying pre-earnings insurance in the form of puts or straddles, which is depressing the stock prices, and which may serve to lock them into a trading range until earnings are released.
Bear, if your interpretation is correct, then, IMO, they're wasting their money- I think the quater CC will be extremely oprimistic and if Nevaxtar sales won't screw us up, the stock will react very positively.
I don't think they're necessarily betting against themselves. The 110 calls are also trading briskly. The technique seems to be to buy the puts initially, which depresses the price of the stock and the calls, and then to buy the calls. The May100 calls are selling at 2.75 at the moment ...oops ,just traded at 2.80. The May110's are at .80 ...it will be interesting to see if they move up over the next day or two. Anyway, it's just one of my crackpot theories - whenever you don't understand what's happening, look at the options. I'm glad you approve of SNTS. Prowling around the ulcerative colitis blog on Healingwell, I was struck by (1) how heavily medicated these patients are, (2) how desperate they are for any new medication which will delay colostomy, and (3) how much interest they (and apparently their physicians) have in Uceris.
As for ONXX, I might sell some out of the IRA if it continues to falter, but I don't want to realize the taxable gains in my other accounts. So, for better or for worse, I'm holding through earnings, where I expect the projections to be the real driver.