Here is an explanation: Steady T seems to be long term bullish, but is thinking that the pending report may not clearly, strongly, or decisively meet bullish expectations. Results may be negative and share price will drop sharply. Results may be positive, but not so positive as to indicate near term approval. Results may be controversial as has happened in the past. Even if positive, share price may surge upwards and then drop. Steady is betting that the calls sold will not likely be exercised because odds are these calls like most calls will expire worthless. If so, he will pocket some cash. He is de-risking to some extent-not altogether. However, in the event the results are spectacular and the options are exercised, Steady will probably be satisfied to gain a large, hopefully long term, capital gain.
We see lots of predictions, but predictions are almost always wrong. We don’t know what will be reported or how the report may be perceived. There is plenty of room for the results, even if seemingly very positive, to be attacked. We don’t know what the market may do or what the price of any stock or thing may be at any future point in time. We don’t know how investors may react to the report. Even if positive, we don’t know what the subsequent investor reaction may be when the report is scrutinized and/or attacked. It’s easier to attack a small biotech that is developing a novel drug. It’s like picking wings off of butterflies. Some delight at doing that. If I may make one prediction, it is that no matter how good the results, AVXL will have its critics. Some of those critics are likely to be vicious as long term investors here have experienced on several past occasions.
