Biotech Values

[Rocky3]

My read is that this is a sea change in volatility for MNTA to a sustained lower level, one more consistent with an investment than a speculative stock.

I am not so sure. Lots more binary events are possible.

No question all the IVs are down across the board in the last couple days, but they were much, much higher recently after TEVA said that they would have "word" this month.

My guess is that the IVs will stay "depressed" for awhile. I put the quotes around depressed, because I think that they will stay higher than almost any other stock that I watch.

I plan to continue to sell puts (and Covered Calls on the stock to be put to me in February). Right now it looks like I will be paying ~13.25 for the shares from the 15 puts and 12.50 for the 14 puts. The 10 and 11 puts should expire worthless. Of course there still is a lot of time before expiration and I may not have to buy anything (good news) or may have to buy a lot more (bad news). I really doubt that the 16 and 17 calls will be exercised though. But you never know.

I think that the uncertainty with the tLov approval will make the options interesting. After approval (if it comes), the IVs should really shrink. Then it will be a strict investment issue. As Peter has commented, if any value is given to mCop, the stock should not go down much more. But then, the market often over reacts.

I do think that the valuation models have to account for overhead expenses. I continue to think that overhead will go up much more than others think, with higher employee count and higher compensation. But then, I go back to the big compensation numbers at SEPR after they got approval.