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Biotech / Medical : CEPH
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To: Kevin G. O'Neill who wrote (727)5/12/1998 11:59:00 PM
From: Rusty Johnson  Read Replies (2) of 998
 
Any option traders out there?

Thanks Kevin. Must confess to selling the stock yesterday and half of my May 15's today. Couldn't resist a winner regardless of the announcement.

My strategy for the next biotech approval (say the stock price is 11 in July) follows:

Buy for example, 20 contracts of Aug 15 calls (and some of the stock?).

If the price runs 3 to 4 points in anticipation of approval buy 10 contracts of Aug 10 puts.

Before the announcement, sell 10 contracts of the calls (and possibly the stock) leaving you, in effect, with a straddle.

It seems like biotech stocks were custom made for straddles.

Any "straddlers" out there? Was I just lucky this time? I'll take luck.

Best of luck everyone.
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