Not after tomorrow. But I was surprised to find that you could short it right up almost to 27 today even as the puts were inching up in price.
Oops. Correction: 24.50. I think maxpain as of a few days ago would have been just north of 25. Anyway, the big losers in this are the holders of the Dec calls.
Ray, looks like the old pumpkin made a few bucks on this one. (Actually, my wife made out better - I shorted it for her at 26.63 and never covered any of it, while I covered half my short today at 26.42.) And I have you to thank, since you kind of stirred me up and even made me break my rule of never trading angry. Anyway, I think Stifel and Jeffries played their hand brilliantly and, in fact, really held the door open today for longs to exit. The options trading, with large put positions being established and the prices moving up were the tell. Proving once again that almost everything that happens in this market is a head fake and if you take a cynical view, you will almost never be disappointed. On the bright side, they are obviously going to support the price at the 25.50 level, which, coincidentally happens to be what the maxpain calculation would have predicted several days ago.
Incidentally, the 24.50 price represents about a 10% discount from the price when the secondary was announced: 27.14 - 2.71 = 24.43. If we anticipate an additional 1.5 million shares in an over allotment like last time, the new issue represents a 10% dilution. You don't need a Harvard MBA to do that math.
And now you know why all those puts were bought today. I must say, they put on such a good show today that they half convinced me that it would price above 26. (I had guessed 25.75.) I even covered half my short position toward the close, thinking that they wouldn't announce the price until tomorrow and that I'd get another crack at it.
It was interesting that 5,000 Dec25 puts showed up a couple of days ago, then another 1,000 Dec27's yesterday. Today, the action was in the pricey Dec35 puts, ...I think these in-the-money puts are always more significant. The 1,500 Dec35's @ $9 which crossed today constitute a $1.35 million bet that the offering price will be below 26. They had spent so much money and effort walking it up the morning, that I was sure they would take it over 27 to take out the stops of the shorts and had some short orders in there. But I added to my short position at prices between 26.80 and 26.90, put in buy orders at 26.42to cover and went to lunch, thinking that they would take it below 26.50 and then bring it back up there. I underestimated their duplicity.
At this point you'd have to say they're going to take it up above 27 to take out the stops of the shorts. I think they're overplaying their hand, but we'll see. As long as they're willing to sit on the float, they can make the price whatever they want. Assuming that they committed to take on the shares under 25, I still think they're stretching the bounds of credibility here.
Well, the fact that the puts are advancing suggests that many believe the stock will be offered under 26. Since I think we can assume a 1.5 million share overallotment in addition to the 6.5 million announced shares (like last time), that really amounts to a 10% dilution. Granted, the underwriters can make the price anything they want, but ultimately they have a lot of shares to sell. They sold a lot to the retail shorts this morning, but I would now expect them to walk it down in .25 steps, the next stop being 26.50.
Curiously, while the trading (which we can be sure is nothing but Stifel and Jeffries passing it back and forth) is telling one story, the options are telling another.
My new guess as to the secondary ofering price is 25.75. Remember the stock was making new highs back in February. At the moment, we are welloff our 38+ level of October. In any event, the price is whatever Stifel and Jeffries say it is ... and you can be sure that they will support it there and that they have the float locked up. I am dissappointed because I was sure that it was going down to 25 by options expiration. However, i am not as disappointed as those folks to whom they sold the calls.
In February this stock was making new highs when the secondary was announced. Whereas from Oct 2 to Nov 1, it droped from over 38 to 22. Jeffries and Stifel handled it masterfully last time, let's see what they can do in this market. I will now make my final guess at the pricing: 25.75, simply because of the strange stickiness of that price in some prior sessions.
Yes, it really is silly to expect the offering to be priced above today's market close. The MM's were suggesting 25.80 after hours. The options pricing suggests 25. If you want to sell a lot of anything in a small time window - pies, baseball bats, jackets,or shares - you mark them down.
Those 100 share lots crossing AH at 25.70ish were the MM's, essentially pricing the secondary. This is not good news for longs, since it dilutes the stock and freezes the price around the price of the secondary. ( I'll guess 25.50.) The good news is that Stiefel and Jeffries will be supporting the price in the meantime to earn their fees. Now you know why there were no shares available to short two days ago and why those large chunks of 25 puts suddenly appeared.
Ah, ..if we only knew when we'll know. But I would say that the action here indicates that some believe it's close. In any event, before the PDUFA date, which I believe is in February.
Today's strong persistent move looks like the expectations for approval in CLL in the near term are growing.
This was the company which developed Zytiga and sold it to JNJ for $1billion, which turned out to be a steal. As with Puma, they acquired the rights to the compound and walked it through the various stages of development and trials.
Well, you could be right. However, there are calls representing about a million shares above that price and a clump of puts representing half a million shares at that price.
Well, the options are telling us that on Dec 20, this will be sitting at 25.
Someone is definitely leaning on it @ 27.40. Let's see what happens in the last 15 minutes.