market speculation for October

[gambler2075]

I agree with you 100%. I have been running a few simulations and I think I am going to lock down 12K by selling the 27.50 calls tommorow before earnings and 30 of the 80 $25 calls.

Ok now promise not to get mad at me when MSFT hits 30$ after earnings

g

[KTP]

Ok now promise not to get mad at me when MSFT hits 30$ after earnings

g

Oh, don't you just know that it will. Please don't run the numbers for me after it does and point out I could have made $60,000 or something.

[KTP]

Ok, I sold all of the 27.50 options and 20 of the 80 $25 jan 11 contracts before the bell.

total out of pocket now for the 60 $25 jan 11 contracts is $4200, currently they are worth $12,000. I can comfortably risk $4200 through earnings, considering the strike price is $25 vs the $27.50. At my dream price of $28, they would be worth about $22,000, giving me almost $18,000 in total profit. It ain't $60K, but I would take it in a heartbeat!

[KTP]

#$@!@# gambler!

16.2B 0.62/share vs 15.8B 0.55 estimate.

Trading near $27 in AH, probably will gap to $28 tommorow.

This was easy money...why oh why wasn't I more greedy?

Probably the only time in my life I will ever trade options though...too tense.

[gambler2075]

#$@!@# gambler!

OOPS!



g
p.s. I wanna know how much you would have been up if you held it all and sold at market open tomorrow, and also how much you made when you finally sell out on your options

g

[KTP]

OOPS!



g
p.s. I wanna know how much you would have been up if you held it all and sold at market open tomorrow, and also how much you made when you finally sell out on your options

g

yep yep yep. It wouldn't be a very good thread if it didn't have an ending. Hopefully this will be a happy one!

I am thinking of approaching tommorow like this:

Assume it opens at ~$27, I am pretty sure that it will immediately (within the first 30 minutes) spike up to around $27.50 before dipping back down to the high 26s, where it will remain most of the day. Toward the end of the day it *should* climb back up to the daytime high or even a bit beyond, although it will probably drop a few pennies right before close (the weekend and all).

So I am thinking of selling 30 contracts at the $27.50 price (should be > $3 a option) thus locking in $5000 of pure profit (above my initial investment) and hold out for $4 an option for the remaining 30 contracts, whenever that may happen (possibly during the late day 2nd high I am predicting for tommorow).

Of course if I get really lucky and the early morning high is >$28, then I am considering just dumping all 60 and taking my $22,000 and run.

then the hard times will follow. I must convince myself this was a one time deal and get back to the slow and steady trading of normal stocks.

[KTP]

Well, I sold all 60 contracts near the open for 2.49...lucky me, but I was concerned about the futures pre-market level. I then rebought 40 contracts at 2.14 during a dip, so now I am up about $4000 from the start of all of this mess in addition to holding 40 contracts currently worth 2.32. I figure I am totally within my rights to set aside the $4,000 profit and my inital investment and have some fun with these 40 contracts. I may trade in and out with them a few times before QE2 and the elections.

[gambler2075]

Just wanted to add an example of deep DD (due diligence) when it comes to biopharma investing... AVNR has a PDUFA (fda decision) on Oct 30th, and the stock has been all over the place recently (including today's bear raid down to 2.70). This example from gekkowire is a good example of what I consider "deep DD" which is far more in depth than what the average investor does. Personally, although I have been trading it (made 600$ on it today) I don't plan on holding any into/through the FDA decision.

Avanir Pharmaceuticals (AVNR) Approval Estimate » GekkoWire

g

p.s. it is kind of annoying how they have so many ads in the analysis, but the content once you get to it is good.

AVNR approved by the FDA...

http://www.accessdata.fda.gov/Scripts/cder/DrugsatFDA/index.cfm?fuseaction=Search.DrugDetails

fortunately I went long.

g

[KTP]

AVNR approved by the FDA...

http://www.accessdata.fda.gov/Scripts/cder/DrugsatFDA/index.cfm?fuseaction=Search.DrugDetails

fortunately I went long.

g

Why did it spike down to under $2 just before close?

Ah it was some sort of short selling trick I think. Trading is halted now but AVNR will probably open monday at $6 to $8? How long were you? At $2.50 to $3 a share, you could have made a killing! I saw you recommend this play earlier in this thread, but I was too focused on my softie shares.

EDIT: Wow, I read through the message board right around approval time. It looks like a MM or someone dumped a huge market sell order to drive the price down to under $2 so they could trigger the stop loss on other peoples long position. They then bought up several million shares...maybe short covering. Is this type stuff legal?

[gambler2075]

Insane trading day... almost got panicked by that bear-raid, but kept it, and actually averaged more in.

+192K$ today (+20K$ more in Bofa acct)

http://img576.imageshack.us/img576/4461/20101030et.jpg

g

[KTP]

Insane trading day... almost got panicked by that bear-raid, but kept it, and actually averaged more in.

+192K$ today (+20K$ more in Bofa acct)

http://img576.imageshack.us/img576/4461/20101030et.jpg

g

Awwwww, come on, pulling my leg? You are saying you just made $192K today alone? I was feeling good about making $14K

I really think you should quit your day job and file for trader status if you can really make $1 million a month doing those pharma plays. What does your job pay? 300K?

[gambler2075]

Awwwww, come on, pulling my leg? You are saying you just made $192K today alone? I was feeling good about making $14K

I really think you should quit your day job and file for trader status if you can really make $1 million a month doing those pharma plays. What does your job pay? 300K?

Yep, not pulling your leg. I took a fairly huge gamble and it paid off. Days like today don't come along too often.

Actually I made my position size comfortable to the point where I would be ok if I were wrong... I still went in heavier than I usually do for FDA plays. The thing is, though, that AVNR had a much higher chance of success, imo, if you read the companies presentation on the QT prolongation (or lack thereof) and the analysis of the deaths. Depending on if you looked at the Bazett formula or the Fredericia formula for QT correction, it was under the 5ms limit. The only caveat was in HEALTHY individuals, it was longer than 5sec... but I didn't think that would increase the risk of torsades too much.

ok, enough medical speak.

g

forgot to say

CONTRARIANS 4TW!!!

g

p.s. congrats on your gain, too, considering your investment size, you smoked me... lol

[KTP]

Well, you did tell me about AVNR a week or so ago. I wish I had listened. I wouldn't have gotten caught in the bear raid because I would never do a stop loss (maybe a stop limit, but it wouldn't have been triggered since the raid produced a vertical spike down). I feel kind of bad for those people who had their shares *stolen* at 1.35 today.

So lets say I wanted to set aside a little fun money to do some pharma plays. Does it take a significant medical background to be able to know where the edge is? The reason I liked tech is because I have a tech background, plus I know a bunch of people working at apple, google and microsoft. I get a feel for what is going to be hot there. But the pharma stuff....it seems cheap enough to not have to resort to options to get a significant price movement...

I wouldn't mind doing the research...I have plenty of time...I just do not exactly know where to begin. Until a week ago I thought Arena was a place where gladiators fight.

ps: thanks and congrats to you too!

[gambler2075]

AVNR imo was the best chance of success with the recent FDA plays, which is why I played it. But FDA plays are gambles, so you cannot risk more money than you can afford to lose. I was willing to take a loss of ~70% on that position, it was a small enough portion of my portfolio that my account could still recover.

As far as doing the DD, you need to do REALLY DEEP DD. I have a research background as well so I can hold my own in that aspect. But the most important thing is to throw out everything any analyst tells you. Most of them are corrupt, imo.

g

p.p.s. thanks! drinks are on me :P

[KTP]

AVNR imo was the best chance of success with the recent FDA plays, which is why I played it. But FDA plays are gambles, so you cannot risk more money than you can afford to lose. I was willing to take a loss of ~70% on that position, it was a small enough portion of my portfolio that my account could still recover.

As far as doing the DD, you need to do REALLY DEEP DD. I have a research background as well so I can hold my own in that aspect. But the most important thing is to throw out everything any analyst tells you. Most of them are corrupt, imo.

g

p.p.s. thanks! drinks are on me :P

Is the play over with AVNR? A buyout could make the $6 monday price look like a steal (thinking $15 to $20 a share buyout)