Biotech Valuation Message Board

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Biotech / Medical : Biotech Valuation

CRSP 60.86

+11.2%

3:59 PM EST

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To: scaram(o)uche who wrote (10545)	2/20/2004 4:19:06 PM
From: Biomaven	Read Replies (1) of 52153

The only way the open interest makes sense is if they are both closing transactions. Anyone notice the OI in these contracts yesterday? Buying the 35's and selling the 37.5's is an interesting transaction. 100 contracts costs you $3500 (assuming you are a big guy and don't have to pay the spread on both). That's also your maximum loss, which happens at any price below $25. You breakeven is around 30 (dependent however on what the implied vols drop to after the PDUFA date). If the price hits $40 you make about $15k, with your maximum gain around $20k near $50. Of course for us peons that have to pay two spreads the trade is much less attractive. Peter

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