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Biotech / Medical : VD's Model Portfolio & Discussion Thread
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To: Vector1 who wrote (4752)4/24/1998 11:10:00 AM
From: Biomaven  Read Replies (1) of 9719
 
V1,

I took a look at the options prices for ORG, and they back up the fact that there is a squeeze. The implied volatility for the call options is uniformly much lower than that for the puts. In other words, the calls are cheaper than they should be, and the puts more expensive. If you could safely short, you (or at least an options trader) could make money by simultaneously shorting, buying calls and selling puts. This is a fully hedged position, you get money for entering into it and you also get the interest on the short sale. (Assuming the "you" here is a big guy, of course. Maybe if you added a zero or two at the end of your portfolio numbers, Fantasy Brokerage would pay interest on your short position <G>.)

It is possible that the options market might signal when the squeeze is over.

I think ORG was a widely known Sturza short.

Peter
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