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

To: kenhott who wrote (836)	4/25/2007 7:38:50 AM
From: Robohogs	Read Replies (1) \| Respond to of 897

Ken, I got nailed on just that scenario. I was short 2.50 call spreads on DNDN BEFORE the panel and someone exercised into my short April calls (God knows why - must have been trying to force a short cover thinking the short call guy was an ugly SHORT) right before the halt. After the halt, the brokerage bought the short in leave me naked on the long calls for May. Because the trade was a spread for a nickel, I had it on in what looked like notional size and combined with this being done in my fifth largest account, I got a margin call which they immediately began liquidating. Needless to say, they could have sold the long calls (which were worth like $15) but instead went in the wrong order and my account was liquidated (including the bull call spread which was the long part of my trade) except for 1100 shares worth of options. I stubbornly held the calls until $25 and got lucky and sold so I made my targeted return (plus an extra $5-6K) from a very low risk strategy only by taking a ton of risk. Moral: Watch the account twice a day if you do the trade and pick up the phone and talk to a human - don't use email. Jon PS Why do I have 5 accounts? Because I am too lazy to make sure I have all the records somewhere.

To: kenhott who wrote (836)	4/25/2007 9:44:31 AM
From: tuck	Read Replies (2) \| Respond to of 897

>>I will remind everyone that any of the bear option strategies that requires you to sell calls face the issue of having the calls assigned early. << That is why, in the case of bear spreads, for example, one uses puts instead of calls. At least, I do. Yes, it's a debit to open the transaction, but assignment risk is basically nil, and the profit potential is the same. Jon, you posted elsewhere that the dates of implied events in Idos' link regarding short squeezes looked wrong. Option players in biotech have to learn to to be cautious and go out farther than one expects the actual event, even if it costs a bit more money. Play a PDUFA date with a strike in that month at your risk; the FDA can always decide to extend. Companies announce that their trial enrollment was slower than expected, their statistician got sick, etc. Delays happen, and can really burn folks long options. And then there's simple bloody-mindedness, as Kenhott suggests re NRMX. I'm not sure about that one. I think the stock would drop a bit, anyhow, though not as much as on actual announcement of failure, granted. BTW, I have opened August put bear spreads on NRMX, and may add to them if NRMX gets strong for some reason. The AGIX event was AZN dropping the partnership, which happened two days after that blog was written. Kenhott called that one correctly, though it wasn't the hardest call to make. Cheers, Tuck