TRADE IDEA: NVX COVERED CALL
Updated
Thanks to TheBanker and the Biopharma chat room for spotting this one ... . A little bit of research on its implied volatility percentage, and voila, a diamond in the rough, premium selling play ... .
Metrics:
100 Shares at 7.56
Sell Aug 19th 8 short call
Whole Package: $620 debit (6.20 will be your cost basis in the shares)
Max Profit: $170 if called away at 8/share or about at 27% ROC
Naturally, this isn't ideal, since the bottom it put in was way below here. Because of that, I'm doing this small, just in case their Phase III RSV trial doesn't turn out as stellar as hoped ... .
Metrics:
100 Shares at 7.56
Sell Aug 19th 8 short call
Whole Package: $620 debit (6.20 will be your cost basis in the shares)
Max Profit: $170 if called away at 8/share or about at 27% ROC
Naturally, this isn't ideal, since the bottom it put in was way below here. Because of that, I'm doing this small, just in case their Phase III RSV trial doesn't turn out as stellar as hoped ... .
Note
As suspected, the setup wasn't as sexy as expected when NY opened ... . I'll have another look at it tomorrow when I have a chance to price it during open market hours.Note
As an alternative to NVAX, I may go with PGNX; it has a more diverse pipeline ... .Note
Finally took the plunge and filled this one today for a 6.40 debit. My only concern is that this company is basically a "one trick pony" with their only item in the pipeline an RSV vaccine in Phase III.
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