EXAS April options mis-priced

Discussion in 'Options' started by vanv0029, Apr 4, 2013.

  1. EXAS that is a late stage biotech company developing a stool DNA diagnostic
    test for Colon cancer has interesting April options with very high IV
    (150 to 220). EXAS was up 0.50 cents to around 10 today,
    but April option premiums barely moved. The diagnostic test is an
    alternative to the unpleasant colonoscopy test so if approved by the FDA
    should have an immediate large market.

    EXAS is interesting because it is heavily shorted by hedgies who think
    its balance sheet is terrible. On the other side are greedy call option
    home run hitters buying calls. Put-call parity at its best.

    Since April options expire in only 11 trading days, I do not think much can
    go wrong in such as short period of time. Do your own DD, but I do not
    think there will be much news until some May medical conference reports.

    EXAS is not a safe stock for buying puts or selling calls. I have been selling
    mostly 9 puts naked or indirectly by buying shares and selling 10 and 11
    covered calls against the stock, i.e. strategy is selling different strike puts.
    I think covered calls in this case are more flexible. Return is maybe 20
    percent for 11 days. Even bad news that means the test is not quite as good
    as original accuracy results will, I think, not cause the share price
    to fall much because DNA cancer analysis know how is still valuable.

    If there is no news before April 19, I will probably sell OTM May calls
    against my shares but further from the market. Best for my current various
    naked puts and covered calls is for EXAS to pin to 10 on expiration day.

    I think the market is totally mis-pricing the EXAS April options maybe
    because stock screening programs see an empty balance sheet that
    looks like illusion and imminent dilusion.
     
  2. seems like your missing something.. no way the implieds are that high with absolutely no announcement or event on schedule..
     
  3. Always good to hear from bots. Try adding the Fidelity quote page (attached)
    EXAS April 19 10 straddle put and call values and then eye ball the IV.
     
  4. top line results from DEEP-C trial expected any day now. And when they come out, stock could be a 4 or 14.

    There was spec it would be out this week and so far it hasn't. If you have insight that the data won't be out for 2 more weeks this is a great trade.
     
  5. zdreg

    zdreg

    what are the chances it could .70?
    have you backed up the truck?
     
  6. ??
     
  7. The vol in APR suggest a high probability of trial results before expiration. It's a coin flip here. It won't be trading at $10 after the results are made public.
     
  8. http://www.cnbc.com/id/100360618?__source=yahoo|headline|quote|text|&par=yahoo

    http://finance.yahoo.com/news/exact-sciences-submits-second-module-123000820.html

    http://finance.yahoo.com/q/bc?s=EXAS&t=1y&l=on&z=l&q=l&c=

    I sold 1 (one) April $7 put for $45.

    I'll take 100 shares at $7. If there's a problem they can probably fix it... and if they can't somebody else (e.g. BMS) can buy them and maybe THEY can fix it. Either way it will be a long time before the whole story is told.

    BTW: Implied Volatility really is that high.

    :)
     
  9. 1) Look at a long-term chart of DNDN to see the types of gaps/jumps that these types of stocks are capable of. :cool:
    2) If the trade doesn't work, it will be "stool", just like the type the researchers are investigating. :eek: :p :D
     
  10. Dndn was different. The drug itself was incredibly controversial. Rven now manu dont believe it works. I do not know anythig about EXAS
     
    #10     Apr 5, 2013