Updated
AKRX - VOL ahead of judges decision
This company has issues. It's association with John Kapoor doesn't help matters. Anytime now, the judge should deliver his decision regarding the merger drama. Based on price and chat, many are expecting the verdict to favor AKRX. Who knows. The possible verdict outcome could be merger proceeds at original terms, proceeds at a reduced price, or Fresenius is allowed to walk away. If it proceeds based on original terms, the stock should shoot up to ~$32-33. If Fresenius is able to walk away, the stock price will drop.
All the drama has caused options IV% to sky rocket to over 200%. (Historical is less than 50%). I sold a $10/$5 put spread. The only outcome that would put my position in jeopardy is if the ruling is totally in Fresenius favor and they are able to walk away. I think that is the least likely outcome, but still a possibility. That is the reason for utilizing a spread versus naked put.
All the drama has caused options IV% to sky rocket to over 200%. (Historical is less than 50%). I sold a $10/$5 put spread. The only outcome that would put my position in jeopardy is if the ruling is totally in Fresenius favor and they are able to walk away. I think that is the least likely outcome, but still a possibility. That is the reason for utilizing a spread versus naked put.
Trade active
Trade still active. No verdict at the moment, lots of potential news on the horizon...all the anticipation has kept IV% over 200%. Even though price action has been favorable, the high IV% has kept option prices high. I could close my position for a .30 gain ($30/contract). At this time, I am choosing to keep my position open.
Note
Trade closed manually
I elected to close my position as AKRX price plummeted. I still had substantial room for it to continue to fall, but I didn't want to take the chance based on the ugly chart. I closed at 1.25 which was a very slight win.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.