Correction: I erased part of the previous post. The sentence should read "I have 23 winning trades and only 9 losing trades and the profit in the winning trades is 7X the loss in the losing trades. I even got out ahead of the late February selloff and reentered about 14 points lower." I was sure that ducking out at 83 and going back in at an average price of 69 would make the trading strategy more profitable. But it didn't.
When a stock is marching relentlessly upward like GILD, there's almost no way you can do better trading it than buying and holding it. In my IRA, where there are no tax consequences of taking a profit, I have traded in and out of it from a pre-split price of 36 up to where it is now, just shy of 100. I think I've been pretty smart about this - I have 23 winning just ahead of the late February selloff and reentered about 14 points lower. However, upon running the numbers, I find that I did much better in my taxable accounts, where I just bought and held. Because even if you buy at 80 and sell at 83, then buy at 84 and sell at 86, you have missed the dollar of appreciation between 83 and 84. Obviously, in a non-IRA account, where there are tax consequences of taking short term profits, the folly is compounded.
I am not, as I have said before, an options expert. However, experience and logic have taught me that the buying of calls, in itself, will tend to drive the share price up, just as the buying of puts, in itself, will tend to depress it. If, for example, this stock opens at 100 tomorrow and retail investors start to load up on Sept105 calls for say, 1.25, the market makers who sell them those calls will hedge their position by buying the stock. Likewise if the stock pulls back a bit, and investors start to buy Sep95 puts, the market makers will attempt to lock in their profits by shorting the stock. As options expiration nears and investors start to cut losses in calls which seem destined to expire out of the money, for example, the hedging positions are sold and the stock tends to drop. For the puts which are expiring out of the money, the hedging short positions are covered and the stock tends to rise. This is a gross oversimplification. I'm sure that some of those here who understand the mechanics of options better than I can provide a fuller explanation.
These numbers are always deceiving, since, unless you have physical possession of your shares, your shares are listed as held by your brokerage house, therefore an institution. Note that heavily shorted companies often are shown as having over 100% institutional ownership. Zillow, for example, is listed as having 111% institutional ownership.
Of course, a more convincing demonstration of neutrality would have been to simply leave the recommendation unchanged. I think the arbitrageurs had settled the price here at 52, anticipating offers in the 55-60 area. Sometimes those evil geniuses at G-S just do stupid stuff.
Come to think of it, no one with a brain in his/her head (or more correctly, no one with $1,000,000 to gamble) would do anything that stupid. At best, I'd guess that you bought some cheap puts. If so, I think you bought them too soon.
Shorting a much ballyhooed stock which has just made a new high going into the sessions where they'll be peddling the next round of options strikes me as foolhardy. Where are your stop losses? I'd set them at no higher than 100.60.
Well, seeing that the stock rallied strongly on options expiration, I would be a bit cautious at this point. Not that there are huge amounts of money at stake, but because it makes sense whether you're buying 10 shares or 10,000. The stock may advance to 100 (or beyond) on Monday as folks roll over into the next round of options, essentially betting on it to go over 100, or to 105 or 110 in the next month. Then I would expect it to fall back a bit. Personally, I think that it will move back to 97.50. So, I would put in a limit order for 5 shares @ 97.50 (mark the order "GTC" or "good til cancelled"). If the stock moves below 97.50 that during the next weeks, you'll get your shares. If that happens, I might put in a similar order for your other 5 shares at, say, 96.75. Of course, if the stock shoots straight through 100 to 110 and stays there, I will have given you very poor advice.
The Europeans have a fairly rational way of looking at drug prices: QALY, or quality-adjusted life years. Essentially, a formula which estimates how many years a drug adds to patient's lifespan and what is the quality of those years. A $60,000 drug which only adds three months of poor quality to a terminal cancer patient would be less attractive than a $60,000 drug which might add 5 years of marginally higher quality for many and 3 years of dramatically higher quality for some. Under this yardstick, Sovaldi is not as expensive as many other drugs.
Yes, Martin is down to a mere 4.4 million shares. And Bischofberger is only holding 2.2 million. I would also point out that, given California tax law, it's sensible to sell your shares as soon as you exercise the option.
It's obviously worth north of $4 right now. Yes, they sat on the bid until the civilians threw in the towel. And guess who picked up those positions. As I've said before, I don't trade options, but sometimes I'm tempted. The most you could have lost was 12 cents on that one.
You are all much more knowledgeable about the intricacies of option trading than I am. Which is why I never trade them, although I am often tempted. Those Aug95calls were selling for 12 cents just a few days ago, which is testimony to how effectively they were sitting on the bid. I just look at the nearest major options pricing for clues to what the MM's might be up to. I added GILD shares a couple of weeks ago on the premise that they would take it up close to 95 before expiration. I planned on selling them today, but will now obviously hold on to them. Even if this were to fall back to 95 tomorrow -which I don't believe it will do now - folks will be rolling over into the Sept 97.50's and 100's. This should take the price up to at least 97.50 over the next month. I have been very lucky with this stock. I entered at a split-adjusted price of about 37 in late 2012 and rode it up to 83 in late February of this year, when I guessed that the biotechs were correcting. I fished around for a bottom, making 3 points and losing a couple of points, and finally reestablished my position at 66-67 and added on progressively. I now own a lot more of it than I'd planned to, but frankly see very little else in this market that's nearly as attractive.
The final collapse of DNDN has spurred this poor devil to new excesses of invention: 6 lies in 2 sentences.
Yes, they once again look stupid. It's as if your real estate broker, right after you've given him the listing, ran an ad describing it as "overpriced".
That short-lived spike on Monday, which looked like an attempt to sell stock to the shorts, in actuality would have done them a huge favor if they'd covered and held the stock. This looks like it wants to settle in at 52 for today. Now we are in the hands of the arbitrageurs, which is fine with me.
You seem to be ignoring the fact that Gilead has already faced this problem with Truvada and other HIV drugs. India has a very competent generic drug industry. Basically, if you charge a high price for a lifesaving drug, they will just make it themselves. Better to license it for co-manufacture or cut the price. The alternative garners you a heap of negative publicity and, in the end, no profit.
Well, I had counted on them taking it up close to 95 last week. But now that everyone has given up on that scenario, I wouldn't be surprised to see it happen this week. They were sitting on the bid @ 93 and 93.25 today. Let's see where they open it tomorrow. I'm guessing above 93.50.
93.50 puts them in play, I think. Wouldn't be surprised to see it go there today, even in the face of a declining market. (The deterioration of the 10 year today pushing it down, IMO.)