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VRX

TRADE IDEA: VRX NOV 18TH 17.5 SHORT PUTOkay, so there's other "big pharma" that I like wayyy better than Valeant (e.g., BMY, GILD). The problem is that BMY and GILD are more expensive and don't have the implied volatility that VRX has (for obvious reasons: they don't have as many "warts" as VRX). Nevertheless, I'm watching VRX here because its implied volatility is so high (>100%), which makes relatively far out-of-the-money short puts comparatively rich in premium. Here, I'm eyeing the 17.5 short puts for obvious reasons -- that strike is below historic lows for this poo pile. Moreover, with an implied vol of >100%, I can get .83 ($83) in credit per contract "at the door," which makes it quite attractive for an underlying at this price. The notion here would be to either (a) keep the premium; or (b) get put the shares at 17.5, after which I would sell calls against (covered call).
V
by NaughtyPines
TRADE IDEA: VRX "MONIED" COVERED CALLLet's start with the metrics for this setup: Buy shares at 24.54 Sell Nov 18th 22.5 short call Whole Package/BE/Cost Basis: 20.40 db per 100 shares/contract (20.40 is also your cost basis and break even) Max Profit: $210 per 100 shares/contract (if called away at 22.50) ROC: 10.3% Now, ordinarily, I like to do "OTM" (i.e., out-of-the money) covered calls where the short call is above the price of the underlying. I feel this gives me a touch more flexibility in working the setup over a substantial period of time should I ultimately decide I want to stay in the play for whatever reason (e.g., continuing high implied volatility, it's ripping to the upside, etc.). Additionally, OTM covered calls offer better ROC %-age metrics, assuming that price continues to move toward your short call. With a "monied" covered call, you're limiting your upside profit potential from the get-go, although you can naturally attempt to roll the "monied" short call up and out for duration, assuming that you can get a decent credit to do so, which isn't always possible. However, in exchange for "going monied," you're getting a benefit: the stock price can continue to decline somewhat, and you can still make money. For instance, if price is still above the short call strike at expiry, your shares are called away and your profit is the short call strike price (x 100) minus what you paid for the setup -- in this case: $2250 minus $2040. If price is below the short call strike, but still above your cost basis, you still make money; the short call expires worthless (for which you book a profit), but the profit you made from the short call exceeds the price decline of the stock. As with any covered call, however, you can lose money if price declines below the cost basis of your setup. In that event, I continue to sell calls against my stock, further reducing my cost basis in my shares until I'm able to exit the trade for scratch or a small profit.
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by NaughtyPines
4
TRADE IDEA: VRX OCT 21ST 25 SHORT PUTHere, I'm looking to sell some premium at or around the 30 delta strike (this one's at the 25 delta). Probability of Profit: 70% Max Profit: $132/contract Break Even: 23.68 Notes: The notion here is either to keep the premium received if price stays above $25 into expiration or roll the option down and out for additional credit if it doesn't. I'm not sure at this point that I want to be put VRX at 25 (lower, as always, is better, and I think 19-20 would be "swell", although we'll just have to see).
VLong
by NaughtyPines
VRX High Probability Long setup tracking entryVRX Shows a high potential long setup on the daily, the entry signal still not yet arrived. I am still tracking the entry and i will update it when it happens and the profit target 1 and 2 will also be updated. The setup shows a very high volume bar and closing down. there must be heavy buying on that bar to have this massive volume. The entry will come soon after testing the selling pressure in that high volume down bar. So stay tuned for the idea. I will post Profit target 1 and profit target 2 for the trade as well as stop loss when the entry arrives. The Profit and risk plan: Exit half of the position or 70% of the position on profit target 1 which will be identified once the entry happen. the remaining of the position would be on trailing stop. and would be updated every day on the close of the day Stay tuned.
VLong
by Stroggwars.