Chester, I think the recent runup in VVUS is partially related to the upcoming split. I haven't followed VVUS for some time after covering in the 30s (shorted in the 50s, 60s, 80, and 40s, in that order).
You're experienced in option trading, can you explain why the premiums for AFCI are low when compared to other high flyers like CIEN, VVUS, AOL, and they all have roughly equal volatility. I guess somewhere in the partial differential equations, a positive forward-looking stock price parameter is weighed heavily in AFCI's case. I bought some SEPT 55 puts at 3 5/8 yesterday when its stock was around 60. A 15% drop in its stock will GUARANTEE a profit from the puts. Given the fact that AFCI has doubled in less than 2 months, a pull back of 15%, or 30% is quite likely between now and Sept. 19.
Regards,
Tom
PS I have a small short position in BAANF too. |
