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Biotech / Medical : ABTI Alpha-Beta Technology
ABTI 0.200+99,900.0%Jun 17 12:34 PM EST
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To: J.F. who wrote (349)7/30/1997 9:04:00 PM
From: Zachary Prensky   of 572
 
Today's trading was interesting, with the increasing implied volatility on the August Calls finally spilling over to the underlying stock price. I never did figure out who was feeding the approx. 2.4 million August 10 calls being bought with the stock around 9ish.
Anyways, I sold a small portion of my aug 10s at 3 1/4; at that price I'd have to assume on successful news the stock would open at 13.5 or better. With the huge overhang of calls out ther owned by speculators I'd rather not take that chance. Yesterday I bought the Aug 10/12.5 spread for 75 cents, meaning I'll be paid $2.50 if the stock is over 12.5 on AUgust 15th - a 250 percent return on a 50/50 bet.

Speaking of handicapping the drug trials, Peter Drake of Vector Securites, the firm that did some underwriting for ABTI, gives the phase III a 60% chance of success. If you have access to TheStreet.Com, check out the article there about ABTI. Basically they mention that a lot of bear are circling the stock, thinking that a lack of a corporate partner for Betafectin means that the pharmaceutical community looks down upon its chances of success. Bill Romeo, ABIT's director of finance, claims that they hadn't signed a deal yet because they were waiting for the results back from phasee to be in a better bargaining position.

ZP
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