Well, while keeping my largish positions in my taxable accounts, I sold all of the shares out of my IRA at an average of 112.80, certain that it would sell off on earnings. I had staggered buy orders in all the way down to 101.20, but the cheapest shares I got were at 108.60. The trouble is, I've only rebuilt 1/3 of my IRA position. So tomorrow I will add another 1/3, hoping that it will trend down on options expiration. No real harm done, but the interesting thing is that the stock snapped back much more quickly than i'd imagined.
Harvoni will replace Sovaldi in Type I HepC, which represents about 60% of US cases. Sovaldi, in combination with other drugs, will still be used to treat the other genotypes. Until GILD eventually introduces a one-pill-fits-all combo treatment.
Just the options washing out. Took out the 115 calls. Let's see if they take out the 110's. Nothing to panic about.
Thanks for the latenight yen-crunching, Durango, Keith, and wrb. It seems to me that if US sales are growing that rapidly, it can mean only one thing: The urologists are starting to use Xtandi, rather than Zytiga in pre-chemo. And that, I think, is the big issue.
I hold it in my taxable accounts and, occasionally, trade it in my IRA.
Should be no problem. The BOJ is printing lots of yen today. I am hoping that the Astellas numbers slip under the radar a bit and that, as last time, we get second bump when MDVN reports.
If they don't take them out completely, they will come darn close. I will add some shares near the end of trading.
The IMS numbers for Zytiga during the week ending 10/24 were TRx 2,188, NRx 622. These were down 7.3% and 13.5% respectively from the prior week's TRx 2,360, NRx 719. The rapid decline in new scripts supports the thesis that Xtandi is winning over urologists in the pre-chemo setting.
Remember that most trading these days is phony. The actual number of shares really changing hand is a small fraction of the volume. In that context, and with an overweight position in calls expiring today, it doesn't take much for the mm's to move a stock - just give it a little push downhill and it will pick up momentum. Interesting to note that the Nov110's are actually being bought at the same time. Which probably means that they plan on peddling those to us in the near future.
I think that our prospects are excellent. Note that in the previous quarter, even though the Astellas report clearly telegraphed strong results for Xtandi and the stock went up to 75, it wasn't until after the MDVN report after hours on Aug 7 that the stock really took off, rising from 75.27 to 83.25 over the next two sessions.
I never trade options, although I am often tempted. But in my experience, options expiration certainly can drive the stock price. Particularly when the options position is overweight either way. The concept of "max pain" - that on the day of expiration the stock will close where it renders the largest possible number of options worthless - makes perfect sense. A large clump of open options on expiration day exerts a powerful gravitational field which pulls everything toward it. I compare it to a situation where grocers have loaded up on yogurt which has a "sell by" date on the third Friday of the month. As the "sell by" date approaches, the yogurt should get marked down. But when some expectations - a great earnings report, big script numbers, for example - interferes with that natural process, yogurt tends to get real cheap on Friday. The people who stay at the party too long will often cry "Manipulation!" The reality is that they themselves have manipulated the price. As the value of the options drops, they rush in to salvage whatever value remains and drive it toward the strike price. It also seems logical to me that options do not exist in a vacuum. When the mm's sell you a call, for example, they hedge by buying the stock or its equivalent. When you move out of the call, they sell the covering position, which tends to drive the stock down. Therefore, just the act of buying a call will tend to drive the price up, which naturally encourages the call buyer. I have looked for a knowledgeable discussion of this hedging process and never found one. In any event, when the expiration of a relatively small number of options can have the effect we saw today, one can only wonder what the effect will be when that huge overhang of Nov 22'nd calls approaches. This is one reason why I am reluctant to completely rebuild my GILD position in my IRA at prices above 110.
I think that your approach is very sound and rational. Essentially, you are hedging your own enthusiasm. I have a similar but somewhat simpler approach. When I become interested in a stock, I take an initial position and never add shares until that position is green. When the secondary position is green, I add more. I also try to formulate a basic thesis for owning the stock. When that thesis is called in doubt, I dump it. Also, watching my stocks closely, I am alert to anomalous behavior. If GM is going up or holding steady while Ford is trending down, I may not buy GM, but I will sell Ford. I also work on the assumption that the only way individual investors really make money in the market is via long term capital gains, and am always trying to find things I can hold for the long term.
Well, here is a stock which moved from 31 something to 37 something over two sessions, and you are the only one who's noticed. This is actually a very well managed company with a great product. Not that anyone cares.
I wouldn't place too much importance on one week's numbers. There have been weekly drops of greater magnitude in the past. The prior two weeks were at new highs.
Perhaps they were wildly overpriced in anticipation of a major rally on earnings and are only now being repriced more realistically.
No one believes that the ABBV drug is a serious threat. The large holders love to wobble it between the key option points, selling calls which will expire out of the money, or, in this case, puts which will expire out of the money. One day they sell you hope, the next day they sell you fear. Today, as one can gather from the posts here, they were selling fear -- and some poor souls were buying.
If we move appreciably lower, I and many others have buy orders waiting. Which is probably why it won't get there. The MM's are happy to sell you worthless puts, but they are reluctant to sell you stock at bargain prices.