Appearing in Barron's this week: "The Best Bet in Biotech Stocks" by Jack Hough suggests that Regeneron Pharmaceuticals Inc (NASDAQ: REGN) has created tools and technologies that help speed the drug-discovery process. Barron's thinks three new potential blockbusters and a packed pipeline of other treatments can boost the shares of this biopharmaceutical company up to 35 percent in a year. Many years ago, when REGN was a much younger company, I served as a consultant to REGN when they were first starting to do clinical trials. At the time, they had no clue how to go about that process especially with regards to staying out of trouble with the FDA. So today they have survived (having spent years losing money) and are actually profitable. http://finance.yahoo.com/q/is?s=REGN+Income+Statement&annual Although their valuation is pretty high. http://finance.yahoo.com/q/ks?s=REGN+Key+Statistics http://stockcharts.com/h-sc/ui?s=REGN Trade: With REGN at 391.95 Nov 370/365 bull put spread for a net credit of $110 Yield = 110/390 = 28% in 186 days or 55% annualized' Prob = 54% Expectation = .54(110) - .45(390) - .01(195) = 59.4 - 175.5 - 1.0 = -117 The expectation should be no surprise since the graph is in a determined downtrend...but this could be the bottom. Price.......... Profit / Loss......... ROM % 273.75........... (390.00)............ -72.00% 315.24........... (390.00)............ -72.00% 358.91........... (390.00)............. -72.00% 365.00........... (390.00)............. -72.00% 368.90............... 0.00.................. 0.00% 370.00............ 110.00................ 28.00% 402.59............ 110.00................ 28.00% 446.26............ 110.00................ 28.00% 489.94............ 110.00................ 28.00% This is obviously not the kind of trade amenable to this situation. Barron's, of course, thinks you should buy the stock and hold it for gains. If I were to do this stock, instead of buying it I would sell the 370 put naked at $3310, take the stock if put and the sell calls until called. This would take a lot more capital ($3,310 in a cash account) than the $390 needed for the spread. Well...I like to read Barron's but I seldom get a trade out of them. They think everybody's got a million bucks to spend.
REGN is an interesting stock, never seen it before, fairly good volume on options, last week ago H&S on the dailies, if it wasn't for that gap, I'd consider it more, so am going to wait see if gap is filled. Thanks for showing it.
Thanks for the heads up on REGN. I also never heard of it before. $390.00 stock Nasdaq 40 Billion Market Cap Fairly good option volume - weekly options available All pluses for option trading. I will add REGN to my watchlist.