Well, having looked at the PCYC option prices, this looks like an even worse straddle than AVIR. Implied volatility is well in excess of ~132% for the Jan 02 25s (PCYC is currently at $25.82). The straddle would cost $12 bucks. This is even more of a one product company than AVIR, and the possibility that it could get cut in half if it failed to meet endpoints in its PIII for Xcytrin is pretty good, and the possibility that it could squeeze significantly is pretty good if does meet them. But you wouldn't make that much, and the risk/reward doesn't seem to be there.
I learned from AVIR. PCYC has had a good run recently. Perhaps there might be a time, if it retreats or holds steady for a bit before the data come out, at which the IVs will look better. But I doubt it. Might be worth watching for the next couple of weeks in a casual way, and I'll update if I see the opportunity get better.
A better gamble would probably be to buy a couple of puts; at least you're not screwed both ways. A much better gamble would be buying IGEN calls. This is a special situation, a legal one, and straddles here might be worth investigating, but the long side is highly favored, IMO. Check that company's SI thread for the reasons. Not much time, though. The IGEN DEC 35s are the first options I've been net long since . . . since . . . I can't remember.
Cheers, Tuck |
