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Strategies & Market Trends : Swing Trading With Options

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To: underdog430 who started this subject	8/28/2001 6:48:58 PM
From: underdog430	of 88

Paul Ruggieri has posted a new FDA Alert on TradingMarkets.com for the upcoming FDA Oncologic Drugs Advisory Committee meeting on 09/11 and 09/12. The companies affected include: Matrix Pharmaceuticals (MATX) has IntraDose on the line, a new drug for treating recurrent head and neck cancer. This is the company's lead drug and the company is small and unprofitable. Ruggieri expects approval but since the drug has a small target population it won't be a blockbuster. The stock has been range bound since hitting a low in March (following a steep decline during February and March). Based on yesterday's close, the implied volatility on MATX is in the high end while statistical volatility is in the low end. The meeting is 09/11 and 09/12 and September expiration is just the week after that. Sell the SEP 10 Put (stock closed at 9.50) for about two bucks or maybe buy a SEP 10/12.5 Call debit spread for around sixty cents? IDEC Pharmaceuticals (IDPH) has Zevalin, a new drug to treat refractory B-cell non-Hodgkin's Lymphoma, on the line. Ruggieri expects Zevalin to be approved. Volatility is in the low end of the range and the stock has been very strong recently (although it looks like it might be hitting some resistance). Buy the SEP 60 Put for about 3.40 in anticipation of an increase in volatility? The approval of Zevalin could have a negative impact on Corixa (CRXA) which has a drug very similar to Zevalin. CRXA's volatility is in the low end of both statistical and implied ranges. The options volume is so low though (OK, so options volume on all of these is pretty low). On 09/12 the committee will make a decision on Eli Lilly's (LLY) Xigris which treats sepsis. Ruggieri has doubts about sepsis treatments but notes that whoever does get approval will win big. Syncor International (SCOR) has a strategic alliance with Lilly to deliver the new sepsis drug (if approved) to hospitals. SCOR has low volatility and a strong stock. Buy the SEP 40 Put for about 2.65 (thinking that volatility and fears will increase as the meeting approaches)? Icos (ICOS) is developing a sepsis drug of their own but has not yet filed a New Drug Application. ICOS volatility is low while the stock is relatively strong (but range bound). ICOS is supposedly developing "the next Viagra" and that's what investors seem to be focusing on. Buy the SEP 65 Put for around 3.75? These are just some thoughts and are not meant to be exhaustive. I like the idea of trading based on FDA meetings since they are a known catalyst (time wise) with a significant impact if unknown direction. On the other hand, there's terrible options volume and a lot of volatility to add to the complications of any trading. Also, keep in mind the sector strength. Mark

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