Don't Noonan
Footballguy
Because if you bought the put you are free rolling. Why force the sale now at $5 when it could go to $8 by June 19th? If on June 19th it is trading below $5 it will automatically be sold at $5.
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Stock Thread (19 Viewers)
- Thread starter St. Louis Bob
- Start date
Nice trade. I had an order to buy back my $7.50 puts on Tuesday this week, too, but the order never filled. It's been flat or down since then/ Plus, I don't think I ever got to the 50% gain plateau so you may have sold your puts earlier than I did. I'm kicking myself, but my losses are contained to within the limits of other dogs I've bought before (cobalt, I am looking at you).
Freak Show
Footballguy
I'm don't think it's happened yet. Does anyone have any guesses as to what will happen?
jvdesigns2002
Footballguy
Holy smokes--that doesn't sound good. I don't really understand or do the options thing--but based on the numbers you just mentioned--what is the best and worse case scenario for him financially?
BassNBrew
Footballguy
ghostguy123
Footballguy
Random question.
Is there some way to look at a live updated list of stonks in order of current performance, such as an ordered list of stonks that are down the highest percentage on the day at that time?
Is there some way to look at a live updated list of stonks in order of current performance, such as an ordered list of stonks that are down the highest percentage on the day at that time?
beef
Footballguy
Mid 5.50's. I've been looking to get back in on this one. Straddling between the 10 & 50 DA's.
FreeBaGeL
Footballguy
Think or swim has pre-built watch lists for things like this every day. I'd have to imagine there are quite a few websites that do as well.
Best case: The price per share gets above $10 (or whatever the highest strike put he sold), he is not required to buy any shares and he keeps the full $40K (or whatever it was in premium) as profit. Worst case, the stock goes to zero. He made $40K in premium but needs to buy 12000 shares at an average cost of $7 (just guessing his average), and loses $84K for a net loss of 44K.
Jayrok
Footballguy
Yes, if the option is exercised you'll receive the shares at the strike you selected when you sold. If your strike was around 5 it isn't as bad as if it were, say, 13. It could go to 0 and you'd buy 200 shares (two puts) at $13. You can then sell them at market value or just hold them and hope they go back up in time.
I did this on another stock where the strike was 210. It plummeted down to $50 almost over night. Fortunately for me, I sold puts via credit spread. So yes, I had to buy at 210 but I could exercise my other side of the trade at 205. So I only lost a couple grand. If I had some just puts... it would have been brutal.
For cheap stocks like this, having to buy them at $5 isn't so bad. Depending on how many puts you sold and the size of your portfolio.
BassNBrew
Footballguy
I don't know that you "free roll" it, especially if you think a rebound is in the cards. Maybe the investor sells half of the puts to net a profit and then holds the rest in case the company goes bankrupt. Just the opposite if a stock doubles--some like to sell half and then ride the rest. But you are correct, they will not literally transact shares.
Me too. If I bought a put which forces the other guy to buy my shares at $10, why would I ever give it a chance to go back up? One would think if it sells in the 2s, it’s near the bottom. Why would I risk it going back up? I can see selling that option again but why would someone else pay a premium for something at the peak?
FreeBaGeL
Footballguy
There isn't a button or anything to exercise and option early. You have to call the broker and get them to grant an exception, and then it can take any amount of time for them to actually do it during which the share price could move while you're waiting.
It's usually easier to just re-sell the put for almost the same profit, which can be done instantly. At that point the new owner is no longer in the green (since they bought at the new higher price) and has no motive to exercise early.
BassNBrew
Footballguy
I think what they were getting at was the guy (put buyer) could now buy the shares at $2 and if they go above $10 they get the gain on those share and are just out the premium if it goes above $10.
sporthenry
Footballguy
Well options have time value. In theory, you should never exercise early because you're losing that value. For simplicity sake, if you sold a put at $5, and the stock is trading at $2, the put on expiration is worth $3. But it is probably trading at some premium to $3, say $3.50. Just as you collected a premium for selling the put, there is still a premium because the stock could go down further. So why would you exercise for $3 of gain when at the very least, you can just sell it for $3.50?
I'm not an expert on options trading but very rarely have I seen early assignment. It is likely around dividends or some other weird situation. This could rise to that weird situation depending on where prices are but I doubt it.
If I had sold a put though, I'd probably be trying to short the stock to hedge some or all of my risk. Put in a limit order at like $4-ish or whatever price you'd want to get out and hope you get executed on. Otherwise, probably just better off holding on and hoping you get a short squeeze in the near-term.
if you buy a stock and it goes up, why would you ever give it a chance to go back down? It can go higher, of course. On the flip side, if someone bought a put and the share price goes to $2, you are correct that the potential for more gain is limited, but if you believe it's going to zero, then you hold the put because it will go up in value. Same kind of risk/reward but opposite direction plus there is a limit to how much the put could be worth. But same principle.
FreeBaGeL
Footballguy
So as a soon to be vested long term NERV share owner, how much of a death knell is this for the company long-term? The stock has generally been around $5 but seems to spike up into the double digits a couple of times per year. Is that possibly in the cards again or has the entire company's stock history been based on this one drug so hence no more spikes in the cards?
Al Czervik
Not wearing pants
Bossman
Footballguy
Anyone want to buy some NERV? ... I've got plenty to spare here.
Trading halted for the 3rd time ... likely done for the day at $4.50.
I'm guessing it settle at around $2 or so next week.
Sold puts at $10's, $7.50's ... lots of $5's and a bunch of $2.50's
This one is gonna sting. Sorry to those that followed me.
Bout the worst possible outcome ... other than them going bankrupt .. which is still on the table.
If they can stay afloat, 2 more drugs in the pipeline ... so maybe I can recoup a little down the road.
Trading halted for the 3rd time ... likely done for the day at $4.50.
I'm guessing it settle at around $2 or so next week.
Sold puts at $10's, $7.50's ... lots of $5's and a bunch of $2.50's
This one is gonna sting. Sorry to those that followed me.
Bout the worst possible outcome ... other than them going bankrupt .. which is still on the table.
If they can stay afloat, 2 more drugs in the pipeline ... so maybe I can recoup a little down the road.
BassNBrew
Footballguy
You are a stand up guy for coming back in here under these circumstances. That good karma will pay off in the future.
I did laugh at your first line...I hope that's what you intended.
eta: Hopefully it turns out better and this is a massive overreaction.
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Good morning, brother. No need to apologize. I went in with eyes wide open. Glad to see that you are here among us and hanging in there.
See you at the shareholder meeting...
BassNBrew
Footballguy
FreeBaGeL
Footballguy
I got all excited this morning because someone bought a ####-ton of NERV calls yesterday right before close, then it came out the results were dropping this morning and lots of people were hammering that buy as clearly insider trading (given the circumstances of the call purchases and the early release of results it seemed to point to the results being good). So I had about 5 min there thinking we were all going to be rolling in dough.
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jvdesigns2002
Footballguy
I don't fully understand the options game--but with that said--I wish you the best. Hopefully one of their other drugs pan out. While we might not all agree on stock picks or market outlooks-- I think we all root for fellow fbg's to do well. Positive vibes your way man.
As I mentioned above, the report was not good but there were some silver linings. The treatment was well tolerated and the higher dosed group did achieve statistically significant results. I don't know enough about the FDA and meds and such, but I know statistics, and some of their other "sub-groups" had results that were *almost* statistically significant. True, other groups showed essentially no effect. Could this lead to bankruptcy? I suppose so, but I read the report as not the end of the road but more of a guide to further study. Like many small biotechs, though, they could easily run out of cash before the payoff, so I'm not going to completely sugar coat the situation.
ETA: From the CEO: "Even though this study didn't achieve its primary and key secondary endpoints, primarily due to a larger than expected placebo effect at Week 12, results obtained with the 64 mg dose including the early onset of effect and functional improvement as measured by PSP suggest roluperidone merits continued investigation for the treatment of primary negative symptoms," said Chief Executive Remy Luthringer.
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Don Hutson
Footballguy
CYDY briefly popped up to $2.98. It's at $2.95 right now.
Me either and when it blows up like this, I feel glad that I don't. Of course all these drug companies are susceptible to massive instant beat downs.
NERV is trading very choppily. For anyone interested, it tried to open at $4.50 but was halted. Poked its head out at $2.20 a bit ago and then now it jumped to $2.53. It appears halted again but it might just be my lame tech setup. Could this pop back up to $4 or $4.50? Sure. Come get your gambling fix.
ETA: Gapped up to $2.84 just now
ETA: Gapped up to $2.84 just now
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Don't Noonan
Footballguy
Sorry I am assuming the person who bought the puts owned the shares long. If that is the case then yes they no the have a for sure sale price at $5 up until June 19th so they could just wait and see if the price recovers. If the bought a naked put then yes covering for a profit makes sense. They could also cover for a profit if they owned the shares long.
Let me throw some love to Bossman with an explanation even though I know he's done this before. Suppose you liked the stock three weeks ago when it was trading at $10 per share and you've got $20 grand to invest. You could outright buy 2000 shares and, let's assume the thing is at $2.50 now (sheesh), you are now down 75%. Your holding is worth $5000.
Instead, Bossman and his band of merry put sellers decided to sell puts three weeks ago. They can sell a $5 put contract for about $0.80 which represents 100 shares. With the $20 grand stake, they have collateral to sell 40 contracts (representing 4000 shares at $5 per share), making $3200 in premium. If those shares are now worth only $2.50, those 4000 shares would only be worth $10000. Add that to the $3200 premium and these folks are only down 35%. Their investment is now worth $13200.
Don't pity the folks who sold puts. Pity those who bought shares at $10. To say it another way, selling puts is more conservative than buying shares outright. But in both cases, sometimes we invest poorly and end up on the wrong side of the trade.
We need a support group. I'll be in for 1200 shares at a cost basis of $6.25 with about $2000 in premium not even factored in to that cost. Max loss is $5500 if it goes to zero, break even is at $4.60. I'm not dying over here but it isn't pleasant.
ConstruxBoy
Kate's Daddy
Jayrok
Footballguy
Selling puts at 5 or 7.50 strike is much safer than doing this with a stock currently trading in the 100s or 200s or more. Lots and lots of room to fall with those. At 5, not as much a blow if it drops to $2. Hang on to the shares and you're back in business when it's back over 5 or 7.50.
Guys can also roll those trades out another month if they think the extra time will allow the SP to get back up over their strike.
Betterbelieveit
Footballguy
I am confused. Sorry. I have never dabbled in options until NERV. Not sure I will again for awhile as I need to gather a better education of these before I do. But right now my line looks like this.
NERV 5.00 PUT
JUN 19, 2020
5 shares
2.50 last
+ 1.50 change
$597.30 total g/L
$1,250.00 MKT value
Can anyone explain. Can I sell? Should I? Sorry for my lack of knowledge and I appreciate everyone's input here.
NERV 5.00 PUT
JUN 19, 2020
5 shares
2.50 last
+ 1.50 change
$597.30 total g/L
$1,250.00 MKT value
Can anyone explain. Can I sell? Should I? Sorry for my lack of knowledge and I appreciate everyone's input here.
![[icon]](/data/avatars/m/5/5167.jpg?1660313464){kind=avatar}
Todem
Footballguy
Looks like you sold 5 puts for June 19. You may choose to do nothing and wait. If the price per share reaches $5 or more come June 19th, then you keep your premiums and can wipe your hands clean of NERV. If you want to exit your position, you need to buy those five puts. At this moment, they cost $2.50 each so it would cost you $1250 to buy them back, plus transaction fees. You would want to do this if you think the price per share will go even lower than it is now. If you think it will rise, then you could buy those puts in between now and June 19th. If the price per share is higher, then the puts would be cheaper and you would lose less.
