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Strategies & Market Trends : Advanced Option Strategies
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To: EJ who wrote (205)9/9/1998 11:25:00 PM
From: AurumRabosa  Read Replies (1) of 355
 
Nice market call but your bear spread scares me. IMNX has 125% implied volatility and for a reason, it moves a lot, like today's $6.125 drop. If you put this short Sep 70 call/long Sep 75 call bear spread on at the highest possible price today you would've netted $1.09. Had IMNX moved up $6.125 instead of down this bear spread would be worth about $0.20. If it expires at $75 then it'd be a loss of $3.91. If IMNX moved to $75 real fast you'd be carrying a debit of over $7 waiting for expiration so the time premium would decay away.

I look at IMNX and see a short straddle staring me in the face. Sell the Sep 55 call for $7.125 and sell the Sep 55 put for $6.25 to net $13.34 with only 8 days life left. That gives breakeven points, at expiration, of $42 on the downside and $68 on the upside. With IMNX having been in a $50 to $80 trading range for the last year I think that's a decent bet, unless, there's bad news like an FDA NDA denial, then jump quick. Big problem is I don't think I could find takers for the other side of the trade.

Even the long call Sep 55 butterfly looks pretty good with a maximum profit of $555.50 and minimum profit of $55.50 assuming you could get it put on at the closing ask prices of today.
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