Replies to post #108284 on Biotech Values

[wallstarb]

Buy the calls and short the stock. You'll make $$$ on the upside and downside - if it just languishes @ current levels then you'll lose $$$ due to decay (theta) of the option premium - I havent looked at the options in a while so I'm not sure how expensive or cheap implied vol is, but if its relatively low (for MNTA) then it might be worth a shot - if you are somewhat more bullish then you might adjust your short hedge down a little rather then keeping the trade delta neutral.

[HattieTheWitch]

...In general I prefer to sell options and take in the premium.

I do too, but I have come to feel that this is a special situation. I just wish there were longer-term options available at the moment.

Thanks for your reply.

[biomaven0]

buy 2 June calls at 12

But likely those go to zero (or close to it) if Teva got approval. So hard for me to see how that is a conservative strategy.

Buying calls makes little sense to me here. There is unlikely to be an explosive move to the upside (chances are better for a slow and steady increase over a long period), whereas there could be to the downside.

Selling just out of the money covered calls is a better strategy in my view. So still bullish (you are net long), but the premium gives you more income and/or some protection on the downside.

Peter