ENZN - Options Double Down

Discussion in 'Trading' started by livevol_ophir, Jan 8, 2010.

  1. livevol_ophir

    livevol_ophir ET Sponsor

    The company has traded 3600 options today on daily average option volume of 295. Zero (0) puts have traded today - everything has been a call.

    The day's biggest trades tell the story. There is a buyer of both Aug 7.5 and Aug 10 calls. This is referred to as a call "stupid" (a spread that is the same side twice). Note the small OI relative to trade size - these are opening orders.

    The Aug 7.5 calls are trading ~3.60 and the Aug 10 calls are trading ~1.85. I believe the 7's to be purchases because the biggest order was 1261 for 3.60 vs 3.30 x 3.70 NBBO. This is clearly closer to the offer - probably cust purchases (similar analysis for the Aug 10s).

    What's the News? (below provided by www.theflyonthewall.com)
    Enzon opens Phase 2 study of PEG-SN38 for breast cancer
    Enzon Pharmaceuticals announced that the first patient has been treated in the Phase 2 studies of PEG-SN38 for metastatic breast cancer. PEG-SN38 or EZN-2208 is Enzon’s PEGylated form of SN38, the active metabolite of the cancer drug Camptosar. The PEG-SN38 compound is currently being evaluated in a Phase 2 study for metastatic colorectal cancer.

    Regardless of the stock and trading - I hope this one turns out to be a winner.

    You can see details, trades, price on my blog:
    http://livevol.blogspot.com/2010/01/enzon-enzn-opening-call-stupid-purchase.html
     
  2. 30 days short interest... notice how none of the reputable biotech funds own it.

    Where is SAC, Perceptive, Visum, Healthcor, Sectoral.. etc...

    It's a POS
     
  3. livevol_ophir

    livevol_ophir ET Sponsor

    Lol. It may well be...
     
  4. So how do you make money on the average option screen trade that you do - buy volatility?
     
  5. livevol_ophir

    livevol_ophir ET Sponsor

    There is no average trade.

    (1) Sometimes I see people paying up for options and I offer them to get what I perceive as edge based on my theo. If it's one line specific I can often times spread it off for a lot of edge because a kink develops in the skew on one strike.

    (2) Sometimes I piggy back order flow but do the trade for better prices than the size.

    (3) Sometimes I do nothing or pair trade. i.e. get same delta bet but pay less vega by combining (1) in the heavy trading stock and (2) in a highly correlated stock; where I am looking for the generic linear correlation, not any other rank.

    Usually I just observe and remember the big bets. If they are winners twice, three times in a row in the same stock with similar bets, I go for strategy (2). If there is no reason to believe they are winners, I follow number (1).

    Of course, many times, I do nothing b/c I do not perceive edge in either side.

    Following order flow is rarely the obvious piggy back trade. Trading is a game of memory. If you can't recall trades 3-6 months ago in stocks you follow, you will have trouble trading.

    Simple test: Can you remember the biggest trade you did every day of the week for the last 2 weeks even if things were uber slow? If you can't, it's probably trouble. If you can, you are probably making money trading.