June 03, 2010
– Comments (3) |
RELATED TICKERS: QCOR.DL
Chances are looking extremely good for an FDA approval decision after the FDA panel gave their all ok sign on May 6th for Approval.
How to play this?
Buy QCOR shares, then buy equal amounts of June $10 Puts as Insurance.
Note 1000 shares = 10 Puts
Currently the bid on $10 June Put is .60 and the ask is .80
So 10 PUTS would cost you anywhere between $600 - $800 dollars but you get the safety on your 1,000 shares just in case by some odd chance they don't get approval which is a tiny chance.
Approval should send the stock up 20%-30% in my opinion so your 1,000 shares should net $2,000 to $3,000 minus the $600-$800 Put insurance.
It would be interesting to see how your idea plays out, and how it would've compared to a similar strategy for DNDN (recently approved) and ITMN (recently rejected). I've no experience with options, and only have the most basic idea of how they work.