Does anyone know whether the FDA releases the decision on a new drug approval (or not) at a specific time like 9 AM EST or whether there is no way to know the exact time? The question is of interest because I noted that the FDA is due to issue a decision on 9/21 for a European quoted company (no US listing). If the FDA would issue their decision before 5.30 PM Central European Time - i.e. 11.30 EST this means that the options expiring on that day capture the volatility implicit in the decision. For the option valuation this makes a very big difference.
Its a good question. I was watching GWPH last month and the pending approval/disapproval of their cannaboid based epilepsy drug. It was supposed to be on the 17th... don't quote me on that, but either way, the decision came out 3 days early. So I don't think they adhere to a rigid schedule for the sake of Wall Street. They should though. Lots of fortunes are won and lost in that game, its hard enough as it is.
Well here its really time sensitive - the date is firm and verifiable but if it is announced before market closure in Europe I think there is a free lunch available on the option market at the moment. I looked around but i cant find a time stamp on FDA news releases sadly.
Feel like sharing the stock? No biggie if you don't... but I'll look if you want. I have about 5 bookmarks for that stuff I generated following GWPH.
Was trying to recall if this was fda or company related announcement. It was the latter but still a good read. I recall watching that unfold that day, the announcement of the bear raid on yahoo message board and all. https://investorshub.advfn.com/boards/read_msg.aspx?message_id=40336205
The stock is called Pharming Group (NL0010391025) - the med they are awaiting a result on is Ruconest for use in non-hereditary angio oedema (already approved for hereditary). Its practically a one product stock - in the Netherlands this stock has high visibility and an - errm - mixed track record. They announce results on 26th of July and the result on Ruconest is due 21st September which is a Friday expiration of course. The volume and spreads are bad in this share so dont back up the truck - there is no point. My interest is simply that the September 1.40 calls seem quite a cheap buy if the news of the FDA approval is inside the call. The company announced surprise profits at the last Q1 results and there is a sort of support at 1.40 because the CEO said that it was a fair price (yeah bizarrely he actually said it). The stock has volatility so there could well be a good move in it and if they approval for Ruconest would come clearly this has a large upside potential. The run from 0.35 to 1.40 was due to approval for hereditary angio oedema financial results coming in (the approval was a while back but due to really really poor history of this stock investors remain (rightly) very wary. When they saw cash coming in things got a little better. Honestly its just an interesting punt with IMHO little downside if the FDA announcement should be priced into the option. It would be odd to see a big fall with news of that magnitude priced into the option.
One time I had put on a huge straddle position in a similiar situation, and the release was due out on a triple witching friday, if I recall. The FDA decided to postpone the decision until Monday which caused me a total loss on that strategy. Also found out there was a connection (spouse) over there related to a hedge fund? There is no way you can know for certain when the approval results will be released, use my pain for your gain.
I realise that - the FDA could also postpone the decision at any time. However from an option pricing perspective today its meaningful to know if the release would be before close of markets in Europe. The option seller would be in the same situation as me regarding the uncertainty. However if it is normal for the FDA to release say after midday EST then for now the volatility should not be fully priced into the option price.
Ok I answered my own question by verifying action dates against actual releases. There is a lag of a day or even three in general. Hence the options should not price in the volatility of the release of this information.
My wife invested in a heart stent company SRDX. I knew that cardiologist are going more to stents than heart bypass. I asked my cardiologist about them going that way...But he was expressionless!! I couldn't read his face...But I think he took my Q and ran with it...Investing on his own, knowing that was the situation. There was much profit with inside knowledge, first hand, putting them in people...