PTIE attractive option straddle set-up
December 10, 2008
– Comments (2) |
RELATED TICKERS: PTIE
Zzlangerhans brought to my attention the idea of a straddle play on Pain Therapuetics leading up to an FDA decision expected today. After tooking a good look at the chart, I've decided to buy a position in Dec $7.50 strike calls at 0.9 and a smaller position in Dec $5 strike puts at 0.15 (trying to get more at .1 but so far no one will sell them to me.) with the stock at 7.80, the call is 30 cents in the money but only trading for 90 cents... the stock was as high as 9 as last week, giving the call an intrinsic value of 1.5... if PTIE only gets back to 9, the position is a roughly 70% winner. On the flipside, there has been significant insider selling and this company is a 1-drug outfit. Should the FDA frown on PTIE, the stock will be expected to take out the 52-week low at 6.4, and 5 will be in play... thus the puts are not a bad deal at all. I recommend a small nibble at this options straddle if you are looking for a prudent speculation and can afford to lose the money should the stock just pause at 7.5-8 for the next week and a half.
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