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<< If results were bad, I would raise as much money immediately before bad data >>
Could be reverse psychology at work. If they raise the money now the writing about bad data would be on the wall.
<< Could be the lowest volume day in a really long time >>
Price is holding on very low volume and all indices deeply in red. Good sign.
WARRANTS
MNKDW expiring 02/08/2016. The exercise price is $2.40. Each warrant buys .6 of a share. Price: $1.25. Similar to buying leap options.
<< IMO short covering is a more likely scenario given that shorts are finding it hard to buy back shares. >>
Well, assuming your statement is correct, covering short position initiated between $1.5 and $2 with $3 calls costing 0.20 will lead to substantial losses if the stock takes off. I don't think shorts would be doing it. 800 calls or 80K shares is nothing for a serious short investor or a hedge fund. Many here have more than 80k shares.
Looking at the July options last trade for $2, $2.5 and $3 calls was at 0.20. Even if you have to pay 5 cents more for $2 call it would be a much better choice, 19 times return on that extra 5 cents if the PPS goes to $3 or more by expiration. Plus your break even would be $2.25 instead of $3.2.
<< Be careful about selling covered calls because you are limiting your upside >>
Thanks for your concern. I do it with the trading part of my shares, and that part changes with option premiums and expectation of big news. I've been selling calls for the last 6 months as I did not expect major news till May or later. So far I lowered my average share price by at least 30% by selling calls and doing a bit of day trading. That allowed me to get 30% more shares that are basically free and I can continue to sell call on those even thru May and possibly June to generate some free cash using house money. I will not write calls on any part of my core position after the April OPEX.
<< I have some 1.50 calls expiring next week >>
I am short 1.50 covered calls. It's not over yet, 5 more trading days, anything can happen.
<< You're holding SVXY and UVXY both?* >>
This would be a foolish thing to do. The sum of the two always loses money due to the natural decay caused by trading costs and expenses.
http://finance.yahoo.com/q/bc?s=SVXY&t=1m&l=off&z=l&q=l&c=uvxy
<< It seems like they (shorts) are always allowed to cover...jeez >>
Not always, look at MNKD, another heavily shorted stock. Big short squeeze today along with margin calls. I'll happen to PPHM too, have to wait a couple of months.
<< No partner is going to pony up what PPHM wants until the FDA says it's a go. and why would they? >>
Absolutely right. The board is very emotional and irrational. We go down for two days in a row and we have gloom and doom in every post. A couple of days ago when it was trading close to 1.50 board was celebrating and salivating about $30 share price, buyout, partner etc.
C'mon, sober up. Volume is low and MMs can walk the price up or down, whatever they want to do on a particular day. Stock will stay in the trading range till we get some news. So, be prepared for more of the same for the next few weeks or few months.
In the meantime just buy little more on the bottom of the trading range and sell higher or write a few calls. It's never a bad idea to bring the average cost down a bit.
<< I've limited my exposure by selling shares and transferring funds into July call options >>
How many times have you done that already? The cost of buying options just to see them expire worthless adds up quickly. I've been on the other end of those trades - selling options on good part of my shares. The premiums have come down some, selling calls is less attractive now. After the April expiration I will re-evaluate, may sell calls one more time for May.
<< we're less than half daily average volume. >>
Good, going up on a low volume. No sellers and MMs can't drive it down one penny at the time. It should be all up (or flat worst case) from here on for a next couple of weeks barring a massive bear raid, which would be a buying opportunity.
I would rather hold PPHM, AMRN is facing marketing issues, just like VVUS (and ARNA soon). MNKD will continue to go up till July in expectation of positive trial results, should be bought on pullbacks. IMUC has possibilities too, KERX already went up on positive trial results and should go up more in expectation of almost certain approval late in 2013 or early 2014.
<< still think we will see $1.2x before $1.4x >>
Hard to say, closed flat today with all indices in red, we are at the bottom or very close to it. Stock is undervalued, probably by a large margin, so saving a few pennies and possibly missing a big run doesn't look to me as a good trading strategy at this point.
<<..to meet that $1.20 in order to fill the 250K bid? >>
Well, 250K shares at 1.2 is $300K. This may be a large purchase for an individual, although I believe quite a few on this board may have that much or more in PPHM, it is certainly a very small investment for a Hedge fund or some other entity capable of driving the stock down. Stock is drifting lower on no news and no buyers, volume tells it all.
We only have positive posts and articles here. Here is a negative one - it is always good to have balance of both.
http://seekingalpha.com/article/1267221-omeros-doesn-t-look-like-that-much-of-an-opportunity?source=yahoo
Omeros Doesn't Look Like That Much Of An Opportunity
Mar 12 2013, 15:09 | 15 comments | about: OMER, includes: AGN, ALXN, NVS
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)
Biotechnology is hard enough all on its own without investors complicating things with low-potential drugs in difficult markets. With that in mind, I don't see significant opportunity in Omeros (OMER). The company's near-term pipeline for ophthalmology and knee surgery isn't all that promising, and the early-stage pipeline of MASP-2, PDE10, PDE7, GPCR, and PPAR-gamma has far too little supporting data at this point to validate a high valuation or multiple.
OMS302 Likely To Make It, But Will It Matter??
Of all of the compounds under development at Omeros, OMS302 ('302) is both the farthest along in development and the most likely to reach the market. Unfortunately, I'm not certain there's a substantial market opportunity for it.
'302 is a combination of two previously-approved (and now generic) drugs, ketorolac and phenylephrine, designed to be administered with standard irrigation solution during cataract surgeries (intraocular lens replacement surgery). Together, the drugs help to maintain pupil dilation and reduce post-operative pain.
Phase III results were successful - the combination did show statistically significant pupil dilation and reduction in post-op pain. As a result, the company should make an NDA filing presently.
Unfortunately, I don't think this drug is going to amount to much. Although both constituents have been used in a pre-surgery setting, there has been no meaningful signal in clinical trials to demonstrate superior efficacy to the combination when used during the surgery. Maintaining proper pupil dilation is not really a problem with the current approach, and I fear that investors have made too much of the pain aspect of this combination.
Modern cataract procedures are relatively pain-free - a review of journal literature suggests that around 50-60% of patients experience no pain, with an additional one-third experiencing "slight discomfort." Even Omeros' own study reflects relatively little pain - 15% of the placebo group saw moderate to high pain, while about 7% of those receiving the drug combo had that experience. What's more, there a variety of drugs available on a post-op basis for those experiencing pain - ranging from Bausch & Lomb's Lotemax to a host of generics.
In my mind, then, this will restrict usage/acceptance of the compound to fairly limited situations. Perhaps there will be a niche in the premium market (about 15% of procedures) where co-pays and reimbursement are not an issue, but I struggle to see the utility of this drug in a normal clinical setting - it adds cost to the procedure for modest (at best) benefits.
All of that said, I'm not sure that investors need to worry about generic substitution or compounding. Some have suggested that surgeons could simply use generic epinephrine and lidocaine drops, but I'm not sure that's a viable approach - ophthalmic epinephrine contains preservatives that could be problematic in a surgeon setting, while lidocaine has only weak (and inconsistent) anti-inflammatory properties.
OMS103HP Could Have A Tougher Road
Omeros' other late-stage drug is OMS103HP - a combination of ketoprofen, amitriptyline, and oxymetazoline targeted for use as an addition to irrigation solution for knee surgery. Not unlike '302, the objective here would be to reduce post-op pain and inflammation for patients undergoing knee surgery.
Unlike cataract surgery, post-op pain is still a relevant concern for knee procedures, even those performed with minimally invasive techniques (like an arthroscope). Unfortunately, the clinical development progression as not been as favorable.
A Phase III study of '103 in ACL repair procedures failed to achieve its primary endpoint. Likewise, a Phase III study in menisectomy delivered a failure on its primary endpoint (the Knee Injury and Osteoarthritis Outcome Score, or KOOS), while meeting the secondary pain endpoint. The company has opted to launch a second Phase III study, this one with pain as the primary endpoint, and that should begin in the first half of 2013.
Here, too, I have serious doubts about the market potential for this drug. The narcotic-sparing benefits seen in earlier studies are nice, and the FDA has accepted pain endpoints before (as with Cadence Pharmaceuticals' (CADX) Ofirmev), but I do not believe that Omeros has met the burden of proof with respect to showing that '103 is meaningfully superior to the current standard of care of administering steroids and pain medication during and/or after a knee surgery procedure.
That is relevant, as the reimbursement environment has forced hospitals to clamp down on procedure costs for more routine surgeries. Without a demonstrated superiority to the standard of care, Omeros will be hard-pressed to sell the combination at any real premium to generic alternatives. What's more, investors should also realize that the medical community often has a regrettably cavalier attitude regarding patient pain - it's not objectively quantifiable (there's no blood test for it), and hospitals and doctors both have a long history of being stubborn about adopting new practices with only pain reduction as the benefit.
A Pipeline That Sounds Sexy, But Is Far From Primetime
One of the things that concerns me about Omeros as an investment is the amount of attention given to its early-stage pipeline. Regrettably, this is an all-too-familiar situation in biotech - companies with poor (or even just mediocre) late-stage prospects try to divert attention to the "potential blockbusters" deep down in the pipeline. While I happily acknowledge that Omeros is exploring some interesting areas of biotech, there's just far too little data to get excited at this point.
OMS721 is an early-stage MASP-2 inhibitor that should enter the clinic in 2013, as the company has indicated that it intends to file an IND in the second quarter of 2013. In theory, this could be a powerful drug - offering a weekly or semi-monthly subcutaneous injection for patients suffering from paroxysmal nocturnal hemoglobinuria (PNH) and/or atypical hemolytic uremic syndrome (aHUS).
These two conditions have made Alexion's (ALXN) Soliris a blockbuster drug (with incredibly high pricing), but Soliris has to be given as an infusion (less comfortable for the patient) and the safety profile is less than perfect (particularly with respect to acquired immune response). If OMS721 can demonstrate solid efficacy and a clean safety profile, it could be a winner. What's more, drug trials for rare diseases tend to be smaller, faster, and cheaper than regular drug studies.
Behind (or alongside) '721 is OMS824 - a PDE10 inhibitor that Omeros is studying as a treatment for schizophrenia and may investigate for Alzheimer's and/or memory disorders. Effective branded anti-psychotics are generally worth $1 billion or more in commercial sales, and there is very definitely a need for better drugs - particularly those that can treat both positive and negative symptoms, while offering better side-effect and tolerability profiles.
Further down the list, Omeros has compounds under development that target PDE7 (largely for movement disorders like Parkinson's and restless leg syndrome) and PPAR-gamma for addictions. The company also has an investigational G protein-coupled receptor (GPCR) program that targets the identification of ligands of orphan GPCRs.
Operational Decisions Leave Questions
It's not just Omeros' pipeline that gives me pause. A few years ago, the company agreed to settle a wrongful termination suit brought by its former CFO for $4 million. The former CFO had alleged that Omeros had submitted false timekeeping records to the NIH for work done under a federal grant. The CFO reported this to the audit committee and, he alleged, the company fired him in retaliation. While I appreciate that sometimes it makes economic sense for a company to settle, and insofar as I know the NIH accepted the company's explanation of the matter, it still looks bad.
I'm also concerned about the company's funding situation and the amount of dilution it has incurred. From 2007, the company's share count has increased from 2.2 million to 26 million. Even so, the company has only about $30 million in cash on hand and authorization to sell up to $60 million of stock in at-the-market transactions (ATMs). As an investor and analyst, I despise ATMs. Although I appreciate their convenience and I understand that biotechs have to raise money by whatever means are available, I find them to be excessively dilutive and I don't like the secrecy that goes with them - if I own part of a company (which is what being an investor means), I want to know what management is doing, and not just after the fact.
It's also worth noting that Omeros now owes about $20 million to Oxford Finance, but the structure and terms of the debt (a 9.5% interest rate) don't really concern me all that much at present.
Potential, But Not Much Value
My issue with owning or recommending Omeros today is that I think the stock offers too little reward relative to the risks at present. While '302 and '103 are relatively low-risk pipeline candidates, they don't offer much potential - arguably not even enough to fully fund the development of the rest of Omeros' pipeline.
I know sell-side analysts are calling for '302 to generate anywhere from $350 million to over $600 million in revenue, but I find that much too optimistic (remember, sell-side research analysts, particularly those at small firms, don't make money being negative on stocks). I believe that '302 can capture 50% share of the premium market (270K procedures in the U.S. per year) at a price of $250. I likewise believe that the company will get 5% of the standard IOC procedure market (153K procedures) and 2% of the much larger ophthalmic surgery market (200K procedures). That all works out to about $160 million in revenue potential.
Keep in mind, too, that selling '302 is not going to be a simple endeavor. While eye care companies like Novartis (NVS), Allergan (AGN), Sanofi (SNY), and Bausch & Lomb have managed to sell new drug formulations at branded prices despite available generics, often that is in the context of drug life cycle management - the company stops selling a dose/version that is going off patent, switches patients to a patented alternative, and then leaves generic companies scrambling to rebuild the market. For Omeros, I believe it will be far more challenging and expensive, and even if the company finds a marketing partner I do not believe the royalties will be all that generous.
For '103, I see the company getting 15% share of the relevant knee procedure market (roughly 330K procedures), with an ASP of $300 per procedure. That suggests $100 million in potential revenue.
Given the early stage of the remainder of Omeros' pipeline, I would assign $40 million in enterprise value today, but that value could/would clearly go much higher if and when there is encouraging Phase II data on compounds like '721 or '824. At present, I am not assigning specific value to '201 in gyno/urological procedures.
Feeding those revenue estimates into my model (which incorporates a revenue multiple, the time to achievement of the revenue, and a discount rate), I come up with a per-share value of $4.50 for '302, $1.25 for '103, and $1.10 for the pipeline. In total, then, I believe Omeros shares are worth $6.85 today. While that is higher than the current share price ($5.75), it is not close enough in value to compensate for the risks involved, nor the opportunity cost of owning this stock relative to other biotechs.
The Bottom Line
While I can appreciate the idea of launching relatively simple combination drugs as a means of funding pipeline development, I think Omeros will be hard-pressed to make real money from its late-stage pipeline. At the same time, there's no reason yet to believe that any of the earlier stage drugs actually work - they might or they might not, and we won't really know anything until Phase II data (and even then, it's hardly certain).
In the meantime, I believe Omeros will continue to dilute shareholders to raise the funds it needs to continue developing its pipeline. While I freely acknowledge that other investor and analysts will disagree with these numbers and can generate much higher fair values on the basis of higher revenue assumptions, I'll be bypassing this stock when it comes to my own money.
Biopharm, how can you pay so much attention to two questionable sentences some jerk posted on tweet? It means absolutely nothing.
<< Is he trading on this information? >>
C'mon now, if that clown were trading on inside information he wouldn't be posting on tweet, he would have kept his mouth shot while pocketing the money.
Besides Bavi will not fail, it works as 2nd line treatment - hard to imagine why it wouldn't be working on healthier patients in 1st line.
<< What's a good point to buy in? >>
That would be up to you. Most investors here expect a runup into the trial results in June, and if positive another runup into the FDA approval process.
<< I also think some on this board are the ones pushing it down to $1.20. >>
Most certainly. You would be very surprised to find out who they are, and I don't think Pedro is in that group.
<< They also said the Dr's who did this study were going to aggressively pursue Lung, Breast, and Prostate cancer using this model. >>
Any chance this will be a strong competition to Bavi in the future? The results they have at Sloan-Kettering Cancer Center with ALL are great.
Immune-system therapy shows promise in adults with leukemia
Published March 21, 2013
Reuters
An experimental therapy that tweaks cancer patients' own immune cells to recognize an often-deadly form of leukemia has shrunk tumors and sent the cancer into remission in adults, according to a U.S. study published on Wednesday.
Although a similar immune-system approach has shown promise in children with this cancer as well as in adults with a related form of leukemia, it is the first time this particular therapy has worked in adults.
Scientists said the finding, which was based on a study of five adults, had "life-saving potential." The study was published in the journal Science Translational Medicine.
The experimental therapy targeted acute lymphoblastic leukemia (ALL), a blood-cell cancer that often proves resistant to chemotherapy and can kill in mere weeks. It is more common in children but especially deadly when it occurs in adults.
Although current treatments cure an estimated 80 percent to 90 percent of children with ALL, they are effective in only 30 percent or fewer of adult cases, said Dr. Michel Sadelain of Memorial Sloan-Kettering Cancer Center in New York, co-leader of the study.
Adults whose ALL has returned after being temporarily beaten back with chemotherapy, Sadelain and his colleagues wrote, "have a dismal prognosis."
The study adds to the evidence that harnessing the immune system to destroy tumors could turn back many cancers.
For instance, a therapeutic vaccine against deadly melanoma, called Yervoy and manufactured by Bristol-Myers Squibb, was approved in 2011, and scores of other immune-system-based drugs to treat cancer are in the pipeline. IMS Health has estimated that global sales of immune-based oncology drugs could reach $75 billion by 2015.
In the new study, scientists started with their patients' T cells, a form of white blood cell. These foot soldiers of the immune system make a beeline for both viruses and cancer cells, which sport molecules that act like homing beacons to attract the T cells.
Normal T cells find and attack only invaders studded with homing beacons they're able to recognize. That's why the immune system does not sweep out all cancers, let alone viruses such as HIV: T cells have not been trained to detect their beacons.
The scientists therefore re-trained the T cells to do so.
After extracting T cells from patients with ALL, a process that takes a few hours, the scientists mixed them with a harmless virus that inserted genes for a three-part molecule: one part that trains T cells to recognize homing beacons on the leukemic cells, called CD19; one part that instructs T cells to kill any such cells they find; and one part that makes T cells survive longer than usual.
After 10 to 12 days, the T cells were now genetically-engineered to detect those beacons. The cells were then returned to their five patients, aged 23, 58, 56, 59 and 66.
"The T cells are living drugs," said Sadelain. "They see the CD19, they kill the cancer cells, and they persist in the body."
Four of the patients' leukemia became undetectable in 18 to 59 days. One patient achieved the remission eight days after treatment - a dramatic result considering that several of the patients had bone marrow "chock full of leukemia," Sadelain said.
But the treatment wasn't always easy on patients. After one got back his genetically-engineered T cells, he developed a 105 degree fever as the T cells ignited what's called a cytokine storm, in which cytokines - hormones - are produced in vast quantities, leading to plummeting blood pressure and spiking fever. A second patient also suffered this cytokine storm, but in both cases it was managed with steroids.
The researchers are raising funds for a larger study, with 50 patients or more, at Sloan-Kettering as well as other cancer centers, including the Dana-Farber Cancer Institute in Boston.
They already have successfully treated three additional patients beyond the five described in the paper, Dr. Renier Brentjens of Sloan-Kettering said, and suspect they might get even better results if they began treatment earlier in the disease.
Read more: http://www.foxnews.com/health/2013/03/21/immune-system-therapy-shows-promise-in-adults-with-leukemia/#ixzz2OT4w94MP
Staying relatively flat on very low volume - we have bottomed out barring a bear raid. Probably safe to add at this level.
<< pay more than $600 million to settle SEC charges >>
That's good, but it is going to be mostly investors money, the Hedge fund manager should also get some jail time. So should Jon Corzine.
<< For the life of me I can't figure out what drove the stock down after better-than-expected earnings and Piper pick up. >>
No buyers - that drove the stock down. Look at the volume, only 50% of the average daily volume. Avid longs are loaded up and sitting on the shares and others, including short term traders, are waiting for news or rumor to jump in. The downward pressure on the stock will continue till we hear something or till the PPS gets ridiculously cheap, like 1.2 or so. The bottom is not in yet.
No option buyers either, I could only sell around 100 Apr 1.5 call contracts for 0.15. Will try again on Monday.
<< Do you think the Lower PPS is related to options expiration today >>
Not a chance. Max Pain is at $1.5, so according to Max Pain theory the pressure should be to push it to 1.50 to burn both 1.5 calls and 1.5 puts.
CP, I am not going to argue with you on this forum, my last post on this subject. Just google "covered put" definition and you will quickly see who is right and who is wrong. You used the wrong terminology and are spinning now.
Covered call and covered put terms do not mean the trades are without risk, or in some cases, PPHM for example, without significant risk. It simply means that the option is covered by underlying long or short position.
<< CP The rest of your comments are wrong, if your naked put is part of a short hedge as in that example. At 10$+ your risk is UNLIMITED if you didn't cover your short stock position. >>
There is nothing wrong with the rest of my comments. I was talking about selling naked puts, not shorting the stock. I'll repeat that statement - selling naked puts has the same risk profile as selling covered calls, it is a low risk trade.
Back to your example - shorting stock and selling puts. If you short a stock and sell put as in your example is not a naked put anymore, it is the covered put. I thought you were talking about naked puts.
Max pain for March 16 options is at 1.5.
Normally share price tends to creep to the Max Pain value at expiration. It will not happen today because the $1.5 put has only 353 contracts written, not enough for MMs and option writers to move the share price. $1.5 calls will expire worthless and the open interest is 1788.
<< 6) There is one more OTHER way, but I would stay away from that one. It is not much publicly documented either. If you SHORT a PUT OPTION at say strike 10$ when the pps is 1.50$ then depending on the date series you'll RECEIVE about 8.50$. You short stock at 1.50$ and now have a total of 10$ cash and the obligation to cover your short share and to accept a short share at 10$ if you are exercised. >>
This is wrong, you do not get short shares, you will get long shares for $10 if the price is < 10 at the expiration. Your gain is limited to $8.5, and loss is limited to $1.5.
The risk profile of selling naked puts is exactly the same as selling covered calls, it is actually a low risk strategy.
Well, what do you expect from that conference, a few pennies boost in PPS? I don't expect any major news there - strictly my opinion. You have to come to your own conclusions about it. I will keep a core position and trade or sell calls on the rest.
<< So milking cents, unless you are trading, is really not the smartest thing to do when you don't knw what news will emerge when! >>
Generally true, but in this particular case we are not likely to get good news or any news for the next few weeks or longer, maybe not till June. That leaves a lot of room to trade, sell covered calls etc. with only a very small chance of missing the boat.
You can say when the stock is at 10 it doesn't make a difference if your cost is $1.50 or 25 cents lower, which is true, but for someone who has a large part of portfolio in this stock it will make a lot of difference if something goes wrong and we don't get to 10, or 5 or even 2. I've been writing covered calls for the past 3 months with reasonable success on good part of my position and will continue to do so for at least another month, maybe more.
GLTA
<< Avid is estimated at a Market Cap of about 250-300MM >>
C'mon, based on what? I like your posts but this makes no sense. 50 millions would be more than generous estimate for that business.
<< are these clowns mixing up the pancreatic MOS (5.2 vs 5.6) and NSCLC? >>
Certainly. On purpose.
<< I get more scared of losing out than of losing money. >>
Yes, we all have to fight that feeling. I keep the core position and play with my trading position. The ratio between the core and trading position should depend on your particular fear to greed ratio.
The other problem here is that most like to make the killing on one particular stock rather than spreading the risk with the main objective of not losing money. Remember two Buffet's rules?
#1 Don't lose money
#2 See rule #1
<< One other note...it makes no sense to see todays price for PPHM, no sense at all! >>
Agreed, it makes no sense if you look at fundamentals alone. No new info in CC other than AVID doing good and lower cash burnout rate. Most other stocks would be flat to slightly up on such CC, but this is not an average stock.
Not enough serious buyers today, they all know if they wait a little more the PPS will go down - very predictable. Look at the trading patterns - when this stock goes up it is always with high volume as many jump on the band-wagon expecting a strong run and afraid they will miss major opportunity, a classical example of greed at work.
After it peaks the day-traders get off and the pullback begins, this time fueled by fear. In the next few days or weeks it may go down to 1.20s again, and at that point it will be such a screaming buy that many will not be able to resist and will start buying in or adding pushing it higher again. The roller-coaster will continue till we get some news, rumors, partnership, buyout etc.
Seems like most investors never learn the very simple trade - sell into the rally and buy back on pullback. Why is that so hard?
<< Broke 1.55 support... >>
No buyers. Stock drops 3 pennies on 150K trade, and then more on 300k trade. Not too bad for me, I am short a lot of Mar16 $1.5 and $2 covered calls.
No major news expected within next few weeks, so the PPS will most likely continue to drift lower. Weak hands are selling and day traders are piling on. H4B, did you short any today?
<< yep this was the right time to short >>
Nope, not at 1.55, you are late again. Where were you in the morning when it was trading at 1.68?
<< any mention of the dosage mixup? >>
Yea, I finally figured it out. They had too much Korn Licker over in Fargo, that caused the mixup.
<< Dog, so what do you do if the pps takes a step change up >>
Good question and there is really no simple answer.
Say, based on fundamentals you decide to buy and hold 100K shares and assume this is your core position. In addition to that you can buy more shares that you are normally willing to hold, say another 80K, and sell covered calls on those to minimize the risk if the share price doesn't go your way.
When I do that I usually sell at the money or slightly above the money covered calls and I am perfectly fine with the idea that those shares are likely to get called away. If that happens I would make about 7 to 10% or so on those shares in about 10 trading days and make close to 1% per day on a stock that has high option premiums like PPHM etc. If the stock doesn't get called away I sell same strike price calls on that position again etc.
Yes, if the stock takes a step change it would've been better not writing those calls but I am not willing to hold more than my core position without some sort of hedging. Sometimes if you do not expect a step change or not facing a binary event you can sell OTM calls also on your core position - it is a judgement call and it doesn't always go your way. However, in the long run this approach will typically beat simple buy and hold strategy.
<< One of our posters says they are writing the options and pocketing the option premiums to reduce the effective cost of PPHM ownership. This strategy will work profitably unless PPHM actually delivers on a pps moving business plan milestone and the pps jumps the call into the money >>
You are correct, I posted that but I do it differently - I keep my core position of about 50 to 60% and trade or write calls on the rest. It has worked pretty good for me the last several months reducing my cost on the core. Another way to successfully trade volatility is to sell OTM covered calls that have zero intrinsic value and use proceeds to buy ITM calls that carry much less premium.