Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Excerpt from Stock World Weekly, Technically Speaking, April 22, 2012.
Courtesy of Pharmboy
That was a nice selloff – one that we have been waiting for, and there may be more to come! This gives us an opportunity to start easing into a few more positions that are already in our virtual portfolio. The virtual portfolio had a few options that we sold and that expired worthless this month: the PLX $5 April 2012 puts, and the INFI $5 April 2012 puts.
Protalix BioTherapeutics, Inc. (PLX, $6.78) has an FDA decision coming up, and we have several positions in it still open. I’m waiting for the decision. For those that like to gamble on risky events, the May $7.5 calls make a good risk/reward for $0.80 cents. I like selling the $10 calls for $0.25 cents, which limits the upside, but also reduces the cost to $0.55 cents for the spread.
OPKO Health, Inc. (OPK, $4.99) is another biotech I like at current prices. Scott Brown at Sabrient has also featured OPK as an insider buying play in Stock World Weekly’s April 1 issue:
“Scott sent in two long trade ideas for this week’s newsletter. First, Scott likes OPKO Health Inc. (OPK, $4.73) because of the repeated insider buying of the stock. “55 buys this year … almost daily.” Scott shared an interview with Dr. Phillip Frost, OPKO’s Chairman and CEO, on Seeking Alpha, by John Eastman. Here’s the introduction:
“‘OPKO Health Inc. Is a pharmaceutical and diagnostics company headquartered in Miami, FL that develops and commercializes novel and proprietary technologies that include molecular diagnostics tests, vaccines to diagnose, treat, and prevent neurological disorders, infectious diseases, oncology, and ophthalmologic diseases. The company works in the United States, Chile, and Mexico and is headed by Phillip Frost, M.D…’ Continue reading the interview with Dr. Frost here.”
OPK’s CEO continues to accumulate shares, and the stock is trading at around $5. I think selling the September $5 call and put for $1.20 combined, coupled with the purchase of shares, has a good risk/reward profile.
As for other new trades:
Vertex Pharmaceuticals (VRTX, $36.58) was already a winner once, and I think the time is ripe to start scaling in for owning shares of this company longer term. I like selling one $30 October 2012 put for $2.50 or better. For more aggressive traders, I like the put sale coupled with buying the $35/40 October 2012 bull call spread for $2.15. That is a net $0.35 cent credit. IF VRTX stays above $30 till the expiration date in October, the net gain is $0.35 – i.e., if the stock closes between $30 and $35, then one pockets the 35 cents.
IF VRTX is above $40, the net gain is $5.35!
Seattle Genetics (SGEN, $19.52) is a staple in my portfolio and a company I continue to believe is being eyed by big pharma. With the recent sell off, I like selling puts to get back in and see if the market makers want to give this to me at a discount. I like selling two $15 September 2012 puts for $1.00 or better.
Immunogen (IMGN, $12.48) – this one has been a huge winner at Phil's Stock World, and it continues to give us premium as we have been selling puts and calls against our virtual stock position. As a new trade, I like selling two $10 October 2012 puts for $1.20 or better. The spreads are very wide on this position, so I start a bit higher and DO NOT take less than $1.20.
