Initially few OP readers mentioned about these two companies that have very very high volatility due to pending FDA announcement about their major drugs. Today I was surfing elite trader and I found similar discussion on the forum so I decided why not we take this discussion right here at OP. In some ways, this IV inflation is similar to earnings announcements that I have extensively covered  in several posts in the past using two option trading strategies i.e. back spread and diagonal back spread. One key difference for AGIX/ BMRN vs. earnings is that till the time news is not out IV will be continued to rise and then right after the news is out, IV will crash. 

Keep pouring in your ideas and we will cover the discussion via open dialogue in the comments section. I shall  soon share risk/reward analysis and some ideas on how to benefit from this opportunity.  Stay tuned.Profitable trading, OptionPundit






3 responses to “AGIX and BMRN”

  1. hmatar Avatar

    well Bmrn is not as bad as the AGIX, Bmrn do have a pipeline generating
    dollars, if we want to get fundamantal on the subject, but AGIX is a
    risky 50 us / 2.5 usd price depending on the outcome.

    Now, like I said before, I was burned on AVNR, so, I am tempted, very
    tempted but but but…

    we could buy the stock, sell july 12.5 calls for 6+, and buy April 7.5
    puts for 3.2 which gives a credit if the stock goes up or down ???

    any ideas ?

  2. OptionPundit Avatar

    I see it as beautiful, the bigger the move expected the better it is, at least the way I would like to trade this. AVNR was in my watchlist too and had a paper trade on that one. While I am looking for ideas from OP readers, I am also refining my strategy for this one so that we cover the risk/reward properly. We also need to find out when is the exact timing they are going to announce, if this is after March expiration, then strategy will be different vs. if they are announcing before March expiration.

    can you pls elaborate on details of your trading thought i.e. how many stocks, how many calls and how many puts?

  3. zoer Avatar

    Let us also not forget the comments from AstraZeneca’s CEO made in December that AGI-1067 has a “low probability for success”. Coming from a partner, that is just stunning, though hardly surprising. After all, AstraZeneca had spent only $50m on this program and had the rights to this potential blockbuster if it worked.

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