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Biotech / Medical : Biotech Derivatives -- Ignore unavailable to you. Want to Upgrade?

To: RWReeves who wrote (473)	6/27/2000 2:36:00 AM
From: dalroi	Read Replies (2) \| Respond to of 555

Calp option premies are indeed hughe instead of selling jan 2001 50/55/60 i sold july 45 (bought stock at 44) think first month premies are too hughe to skip eg july 45 @ 9 3/4 august 45 @ 12 3/8 differnce only about 3$ for one month extra if you believe in calp a nice strategy could be buy stock 48 sell cc 45 9 3/4 sell naked put 45 or 40 5 3/4 or 3 5/8 if above 45 one sells for 45 +16 or 12 (rounded) or retrun is 48-16 = 33 sold for 45 gain 12$ on 33 for 1 month 33% return else if below 45 you buy your new calp stock for 29$ break even becomes then 38 or 20% below price today cheers stefaan

To: RWReeves who wrote (473)	7/7/2000 9:22:03 PM
From: RWReeves	Read Replies (1) \| Respond to of 555

Using long in the money Feb calls on PSSI as a second derivative of FSH (FSH munched PSSI: FSH has no options, PSSI does). Options sell at little time premium. Kind of an arbitrage experiment. If it works here, could be fun in other munch situations. Rabid Finance MBA types can probably synthesize as a leveraged buy of FSH. Might play with this and figure out the equivalent positions. At the least apply B/S to FSH and see what the implied PSSI options prices are. Efficent market? Probably not, I think it will miss the implied volatility of FSH and will need to factor in the possibility of a deal failure. RWR