Historically, how much does an FDA approval of a new drug boost a company? I am looking at a company at around $70 and the FDA will be announcing approval or not on February 23.
Im wearing a blindfold. I think the drug is avastin and the stock is DNA and the event is Feb 23rd. +-12% before the open, you might ride 3-5% out intraday. ... The Market I suppose is discounting any price change on the Event. Upside $76 downside $65 to be more specific than +- 12% You could buy the spread and squeeze out maybe a dollar or so. I would probably buy a small token amount of $70 March calls at $3.70 and hope it rises to $78 or so by March Expiration. It might double. This is all very on the speculative side, but I am guessing with more confidence that the Market has Avastins approval priced into it....
It's DNA obviously. Is this a stock for you or an investment club? If it's for you i'd say option it. Investment club I'd say pass.
It's for me. I am thinking its at 72, so get a March 80 call and March 60 or 65 put? Also, whats an investing club?
The biggest gains or losses are FDA announcements, but with a large company like DNA the swing might not be so great.
DNA does not have any ground breaking drugs in the pipeline. Nothing like Avastin. For the new drug to cause excitement it has to cure cancer or do more than antibodies to VEGF. I wouldnt expect a 12% up day from this so called "new drug" I am guessing its a small molecule cancer drug of some sort, but that is not that exciting like i mentioned before.
The drug IS Avastin. "On February 23, Genentech is awaiting approval on their Avastin drug for breast cancer." -CNBC
oh whoops. Ok, well its just another indication for a current drug. It still will not explode 12% like the first time it came out.
Switz those calls and puts (80 call and 65 put) you suggested you might buy are way too far out of the money. I suggested a 70 call and 65 put, though the Market isnt going jump much either way on this news, though people think it might. Remember, I first said +-12% to March Expiration - not on one Event day. And then I was more specific - a potential low at $65 and high at $76, which would limit the upside on the 70 call and 65 put, or would limit your upside to earning about 40% on the 70 call by itself assuming the Avastin event occurs and the stock responds positively. The $78 target assumes a healthy jump by carrying the 70 call to March expiration, assuming the fundamentals improve and the oversold condition ceases, bringing it back to its old October high near $78. There are obviously better trades out there, this is not the best one out there at this time, but I suppose the 70 call isnt so bad.