Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : Ligand (LGND) Breakout! -- Ignore unavailable to you. Want to Upgrade?

To: Dan O. who wrote (12669)	12/19/1997 12:29:00 PM
From: Flagrante Delictu	Read Replies (1) \| Respond to of 32384

Dan O, To illustrate why option traders are interested in strangles, the one I illustrated a few days ago in the current Dec. contract in LGND, in which the combination of the Dec. 15 put & the Dec 12.50 call had last traded at $12.88, and which therefore had a risk of only thirty eight cents {thirty eight dollars in real money}, presented the opportunity this morning to buy 100 shares of LGND at $11.25 to lock in a gain on the put side of the strangle amounting to $375.00. When you subtact out the cost of the strangle of $ 288.00, the theoretical profit before costs came to $ 87.00, not a bad % gain on a risk of $38.00 in only a few days.. Now of course, it may not have been possible to buy the stangle at $2.88{ two hundred & eighty eight dollars} & it would have taken unusual prescience & execution {if you'll pardon the expression} fortune.It is being illustrated only to show those who might have thought a strangle was merely a means of sexual torture or assault, that an option strangle might result in either financial ecstacy or pain. Bernie McDermott. P.S. the strangle holder is thoretically still long the $12.50 call, which she can choose to sell or hold in the event LGND were to rise above $12.50 BEFORE THE CLOSE. CAN ONE ONLY IMAGINE WHAT WOULD HAPPEN IF THEY ANNOUNCED THE LEPTIN DEAL BEFORE THE CLOSE.THE CALL COULD GO BANANNAS. bERNIE McD. I DONT KNOW WHY EVERYTHING IS COMING OUT IN CAPITAL LETTERS.