Intellipharmaceutics International Inc. (IPCI)

[AngeloFoca]

Here is an interesting transaction that I noticed last wednesday - this was the day that IPCI spiked, and towards the end of the day it was trading at ~ $3.60ish

I was cruising for some deals in IPCI options, and noticed that someone had gotten $2.40 for Jan 2016 $5.00 PUTS. This effectively made his stock cost $2.60, not bad... $1.00 discount to the trading price... AND someone was asking 45 cents for Jan 2015 $5 CALLS.

A bell went off... and as I was putting in my Sell order for the PUTS I saw 18 more of them trade for $2.60 - my order for 100 PUTS was seconds behind it... and as I was writing up my order to buy $5 CALLS, I saw 18 of those trade for 45 cents - my order was seconds behind that for 200 CALL options.

So someone, in a small scale at least, pretty much did what I tried to do. Unfortunately stock was quickly going down and my trades never happened.

This was the strategy - I always work with the options leg of trades first, as stock is always more liquid.

The intent was to sell 100 $5 PUTS at $2.40 thereby effectively make the cost of my stock $2.60 if put to me - at the same time sell 10,000 shares of stock at $3.60 which it was trading at... then take the $1.00 difference and buy 200 Jan $5 CALLS (20,000 shares) at 45 cents each... the remaining 10 cents would more than cover commissions.

This would effectively produce the same results if stock was up to $5 by January... BUT if it went above $5.00 where my CALL options would kick in... my profit thereafter would be on 20K shares rather than the 10K shares I sold.

I don't know if whoever worked the 18 option trades sold the stock or not... may not have... good deal either way... but should have doubled up on the CALLS rather than pocket the 55 cents - it was free money anyway and I think >$5.00 is probable by January.