By Sellputs
Not every day trades like GENZ come around and really perform. Trades like this you must interpret the news extremely quickly and make a directional decision even faster. I look for key words like "death" "failure" "success" Phase III etc. In Genz case i heard "garbage" and "bits of steel found in drugs" this told me alright pull up OTM puts and take the offer. Once i saw the volume come in and it start to puke i sized up bot and held onto my coconuts.
Trades like these are risky but any FDA news can really move a bio tech/bio pharm stock HUGE causing volatility to go nuts and even better the market makers pull out of the options. When the market makers pull out of the options you know Sh*t is hitting the fan and even THEY do not know where this market will go.
As traders we can take advantage of these plays by putting our bids and offers out making a market, if you get hit you get hit. I saw the 50 GENZ put go from .80c to over 3.50 in less then 4 minutes. This is because the MM realized risk was huge, this is a way for us retail traders to put our hard hats on and trade. Trading the options on stories like this i think are better because you you know your RISK to the T, with stock you stand to lose big if you are wrong. Think about it FDA news can send a stock to the stratosphere or to near zero in minutes. Thus if you had 50 grand in the trade and it went against you, your cooked. If you only risked a few thousand in the option and you lose it all you are only out a few pennies a share.
Have a good weekend everyone, today on twitter we had fun. Cough Dennis Kneale cough. have a good weekend everyone. Glad I helped people get into some trades and lock in profits.
Friday, November 13, 2009
The Genzyme trade. Focus on key words like "garbage" (GENZ)
