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

To: tom pope who wrote (13367)	10/6/2004 10:04:53 PM
From: former_pgs	Read Replies (2) \| Respond to of 52153

I agree that CTIC provides a very attractive situation for traders / option players. Dunno if this post is really for an options board, but the scenarios are relevant to valuation to a degree. The position I'm looking at is an uncovered straddle write wherein one sells both a call and a put to pocket the credit, hoping that the underlying stock remains within a range. Example: Sell March 10 calls... 1.45 credit Sell March 10 puts... 4.70 credit That pockets 6.15 dollars in credit immediately, and requires the underlying price to move below 3.85 or above 16.15 for the trade to enter the red. In between those prices lies a scaled range of profit. So this is where the valuation guess begins. Below 4 is a real possibility with Stellar 3 failure, although it may be a quick dip. Above 16 by March, assuming trial success, is not as likely, in my opinion. CTIC is generally low on capital, and will still be paying out for the other Stellar trials as well as the Pixantrone trials. My guess is that they will have to finance once again, although Bianco surely wants to do it on the coat-tails of a successful Stellar trial. Below are some other call / put sale combinations based on today's option prices, and their ranges for the option seller to remain profitable to some degree by March expiration. Their ranges can be skewed based on your valuation for CTIC. March 7.50 Call + March 10 Put: Range 3.25 - 14.25 March 7.50 Call + March 12.50 Put: Range 3.75 - 16.25 March 7.50 Call + March 15 Put: Range 4 - 18.50 March 10 Call + March 10 Put: 3.85 - 16.15 March 10 Call + March 15 Put: 4.55 - 20.45