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Post by mnholdem on Mar 24, 2016 17:25:45 GMT -5
I think that I might qualify for being able to "dumb it down." With that kind of options spread, you only make money if the share price moves significantly. It doesn't matter which direction. You only lose your investment if the price doesn't move.
I forget the name of the strategy and I don't feel like digging McMillan out of my library, but I recall that there are several strategies similar to this where the options trader is betting that the stock is going to move big one way or the other.
The strategy is sometimes used in conjunction with an FDA decision, but other pivotal events - such as the return of the Afrezza NDA and a PR of new (or no) partners - may trigger major share price movement.
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Frankly, I'm a little too dumb to try the strategy out for myself.
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Post by boomboom on Mar 24, 2016 17:57:05 GMT -5
Straddle Position
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Post by peppy on Mar 24, 2016 19:09:11 GMT -5
May I ask you to dumb that down for me. What was the wager being made? Sorry peppy, I had stepped away. The wager is that we go boom or bust. This straddle only pays off if one or the other takes place. if we plod along at $2 through August the straddle is a loser. Thank you all for your explanations. There were 3 One million share trades today, we saw posted, and the shares never came through nasdaq real time trades. IF this stradle accounts for those shares, the trade controls 6.33 million dollars of shares. I wonder why he would think the price could go up big by August? How much did the bet cost him?
I understand he bet the downside as well.
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Post by kbrion77 on Mar 25, 2016 7:04:10 GMT -5
Sorry peppy, I had stepped away. The wager is that we go boom or bust. This straddle only pays off if one or the other takes place. if we plod along at $2 through August the straddle is a loser. Thank you all for your explanations. There were 3 One million share trades today, we saw posted, and the shares never came through nasdaq real time trades. IF this stradle accounts for those shares, the trade controls 6.33 million dollars of shares. I wonder why he would think the price could go up big by August? How much did the bet cost him?
I understand he bet the downside as well. Entirely my theory but my guess is he is backed or doing work for bigger whales (either big pharmas or bigger investors close to big pharmas). I mean am I too naive to think Matt would sell off the company before they filed for bankruptcy? These guys had 2 months to close their short position out and claim historic VICTORY under $1 and they didn't, what the F am I missing!!!!! I remember Matt saying on a call that there were evil forces at work against them or something along those lines, I have always wondered what he meant or found out.
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Post by agedhippie on Mar 25, 2016 10:39:29 GMT -5
May I ask you to dumb that down for me. What was the wager being made? Sorry peppy, I had stepped away. The wager is that we go boom or bust. This straddle only pays off if one or the other takes place. if we plod along at $2 through August the straddle is a loser. Could equally be a strangle in that case. I wonder if this is a play on the IV though. The dates and the options would make sense given the April 5th event.
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