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Biotech / Medical : IDPH--Positive preliminary results for pivotal trial of ID
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To: Vestor who wrote (718)4/19/1997 10:00:00 AM
From: jay a   of 1762
 
interesting coincedence--the puts (250 july 20's) were sold at 1:13. the calls were purchased earlier. let's do some quick analysis on the put sale. if the guy buys 25,000 shs. @ 18 and sells the puts for 3 1/2, his cost basis is now 15 1/2. the put buyer ( the other side of the transaction) obviously wants the stock to drop to make his put value rise. however, he must consider his cost (3 1/2) before exercising at 20. in other words, the put buyer breaks-even at 16 1/2. the put seller breaks-even @ 15 1/2. (interesting, that is were support seems to be of late). selling puts against a position is a great way to lower your cost-basis. if the stock rises, you keep both the stock & the premium (3 1/2). i still consider this a very bullish move. now for the call purchase (250 may 22 1/2's). that obviously is outright bullish. the calls are out-of-the-money and short-term. remember, we are not talking about 5 or 10 calls, but 250!! i know this is rather jumbled and i could go into much more detail. however, i do not think it is necessary on this subject. options are a very specilized area and can be used for many purposes. in the case, it looks as though someone believes the stock is headed higher soon, and he backed it up with his $$$$ ! sorry for the length of this post. i hope it helps. another thing, the point & figure relative strength chart signals a buy! i welcome any feed-back or analysis.
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