This is true for not only DNDN but also all pre-earnings bios. Trial results and FDA rulings are the two key determinants of all pre-earnings bios pps. Financials matter to the extent that cash position points to going concern or dilution. NVLT tanked to a quarter after the pivotal P3 lung cancer trial failed to meet the primary endpoint. By pure luck, I got out just before my trip and hence saved myself a small disaster. Plan to load it around 0.2 for the breast cancer trial results.
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精华 苦辣酸甜难书尽，成败得失笑谈中
- 主题发起人 加京游子
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This is true for not only DNDN but also all pre-earnings bios. Trial results and FDA rulings are the two key determinants of all pre-earnings bios pps. Financials matter to the extent that cash position points to going concern or dilution. NVLT tanked to a quarter after the pivotal P3 lung cancer trial failed to meet the primary endpoint. By pure luck, I got out just before my trip and hence saved myself a small disaster. Plan to load it around 0.2 for the breast cancer trial results.
What a day in Dendreonland!
A serious bear raid in PM trading with a rumour by Fauvus and then spread by Street.com. Since April 28 last year, DNDN has been through two major bear raids, today's PM drop being the minor one. The FDA took an unprecedented step to rule out the rumour. What a buying opportunity in PM! I could not add due to a pre-arranged commitment. Stay tuned for more great buying opportunities as the PDUFA date is drawing closer and closer.
A serious bear raid in PM trading with a rumour by Fauvus and then spread by Street.com. Since April 28 last year, DNDN has been through two major bear raids, today's PM drop being the minor one. The FDA took an unprecedented step to rule out the rumour. What a buying opportunity in PM! I could not add due to a pre-arranged commitment. Stay tuned for more great buying opportunities as the PDUFA date is drawing closer and closer.
lazycatcat
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DNDN
Congratulations on your DNDN position. I am following it but haven't figured out a way to participate. The only idea I have is something like following: Buy DNDN shares; Sell Aug $33 call for $7.65 and buy $33 May put for $5.30. Max return is $2.35 on capital of $33. Once May result is known, I think the volatility premium of this issue will become low.
The share may get more volatile next week after the presentation and towards May....
Congratulations on your DNDN position. I am following it but haven't figured out a way to participate. The only idea I have is something like following: Buy DNDN shares; Sell Aug $33 call for $7.65 and buy $33 May put for $5.30. Max return is $2.35 on capital of $33. Once May result is known, I think the volatility premium of this issue will become low.
The share may get more volatile next week after the presentation and towards May....
Congratulations on your DNDN position. I am following it but haven't figured out a way to participate. The only idea I have is something like following: Buy DNDN shares; Sell Aug $33 call for $7.65 and buy $33 May put for $5.30. Max return is $2.35 on capital of $33. Once May result is known, I think the volatility premium of this issue will become low.
The share may get more volatile next week after the presentation and towards May....
This is something seemingly out of your reach given your conventional wisdom! Did you see today's manipulation? For a revolution, money is inevitable. I feel someone is paying with blood --- the remaining few short hedge funds shall go BK on Provenge approval! DB and JPM are on the long side (along with SAC who used to be a big short) and Fauvus and Street.com on the short (with some deep-pocketed big boys behind, they are both more mouthpiece). It will be interesting, to say the least. Regret very much that my effective control is much smaller compared to yesterday. Provenge will become SOC of prostate cancer by May 1, and it is almost impossible to beat in the next decade or so --- nothing on the horizon yet.
Finally, I decided to trade a little today after riding many round trips but I am feeling that I made a devastating mistake. The FDA came out to nullify a market rumour, unprecedented, my friend, within 1/2 hour of market opening! I wanted to load at 28 in PM but I had to leave the house before 8am when TradeFreedom allows me to trade. This thing may open @40 tomorrow morning and that is what I am afraid of. Hope there will be at least another chance for me to get back in with a meaningful position.
Did you see where UAUA and GNW are today? I had no idea how I bet that big on SVA last year and lost. Apart from SVA, I cannot lose but I lost big with SVA. H1N1 and SVA, my sore spots. WFC is also not my stock. I lost with every bet on it, put or call.
Keep an eye on ITMN, AC on March 9 and the FDA review doc should be out 2-3 days before.
Kiddy plays should stay out. These plays involve with serious money, win or lose.
lazycatcat
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Thanks for the comments and suggestions. Are you sure FDA's result on DNDN will be out on May 1st ? For the type of operation I describe, the date is essential.
I will take a look at the issues you mentioned.
I will take a look at the issues you mentioned.
lazycatcat
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ITMN
The market expects huge volatility of ITMN before 3rd Friday of March. Difficult to play. The balance sheet is pretty weak and so the only hope is FDA approval ...
The market expects huge volatility of ITMN before 3rd Friday of March. Difficult to play. The balance sheet is pretty weak and so the only hope is FDA approval ...
Thanks for the comments and suggestions. Are you sure FDA's result on DNDN will be out on May 1st ? For the type of operation I describe, the date is essential.
I will take a look at the issues you mentioned.
When it comes to the FDA, nothing is sure and that is for sure. The PDUFA is May 1 and my expectations are that it will rule before or on that date. Delayed ruling is more often than not over the last couple of years. So, I can't be sure a ruling will be out. I rode many round trips in the last two months but sold my May calls yesterday and now own shares and 2011 Jan. calls (40 and 50 strike). I expect trading to be volatile at times before the FDA ruling. Have no idea how many shorted shares were covered or how many new shorted positions were built yesterday given the breathtaking volume. Proceeds from my sale yesterday are earmarked to get back in. Should Mr. Market give me another chance, I plan to roll 2011 Jan. calls into 2012 calls in addition to increasing my stake.
Option premium for ITMN is hard to believe but given the expected FDA ruling, this is nothing unusual. I did not study the trials as hard as I should have. My quick impressions were that 1 trial was very positive but the other mildly negative and the FDA review doc will show. Upon seeing this doc, I expect a panic selloff (have seen many before). Then the AC will vote positively and the pps recovers and moves higher. Great quick trading opportunities but hard to get a hold. Have not decided what to do yet. I may even simply pass.
WFC is your favourite. Tell me more about your expectations, both long and short term. I lost big with it twice already and may attempt a third and final try.
lazycatcat
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WFC
Quantitatively, WFC's earning power is as follows:
1. Pre-tax and Pre-provision revenue $40 B per year.
2. Assuming 1.5% charge-off of $800 B loans (currently at 2.7%), annual charge-off is $12 B
3. Assuming 35% tax rate, net profit is $18 B and is $3.65 per share.
The above number should be well known since Buffett first mentioned the $40 B figure and WFC is at the mark as of 2009. The threshold for WFC to reach above goal should be low in about one or two years. So, WFC should be a $40 per share stock.
The reservation by market is probably due to following factors:
1. Impact of second dip or prolonged recession and thus second financial crisis.
2. Commercial real-estate crisis.
3. Higher interest rate.
4. Issues of integrating Wachovia.
5. Reduced balance sheet and thus earning power.
Issue number 1 has probably the most weight as it threatens the survival or earning power of WFC. Plus, WFC's capital ratio is not rock solid as of today. Its reported earnings of MSR in the scale of $1 B per quarter is not sustainable.
Regardless of all the issues, Buffett definitely thinks the earning power of WFC is strengthened rather than reduced in this crisis. Of course, his remarks carry less weight now than before.
Based on the above, the volatility of WFC's stock price may be back to normal and thus fewer chances for speculation. Personally, I am holding WFC stock long-term but also writing 1-year deep out of money calls, 1-year mediumly deep out of money calls and monthly shallow out of money calls.
My positions are unprotected as the chance of WFC going below $20 is low and Buffett's position should exclude qualitative company risk in WFC. The latter fact means significant dip of WFC represents opportunities rather than risks. The covered calls yield quite nicely and hopefully will keep doing so before WFC's stock price is normalized to above $35.
Quantitatively, WFC's earning power is as follows:
1. Pre-tax and Pre-provision revenue $40 B per year.
2. Assuming 1.5% charge-off of $800 B loans (currently at 2.7%), annual charge-off is $12 B
3. Assuming 35% tax rate, net profit is $18 B and is $3.65 per share.
The above number should be well known since Buffett first mentioned the $40 B figure and WFC is at the mark as of 2009. The threshold for WFC to reach above goal should be low in about one or two years. So, WFC should be a $40 per share stock.
The reservation by market is probably due to following factors:
1. Impact of second dip or prolonged recession and thus second financial crisis.
2. Commercial real-estate crisis.
3. Higher interest rate.
4. Issues of integrating Wachovia.
5. Reduced balance sheet and thus earning power.
Issue number 1 has probably the most weight as it threatens the survival or earning power of WFC. Plus, WFC's capital ratio is not rock solid as of today. Its reported earnings of MSR in the scale of $1 B per quarter is not sustainable.
Regardless of all the issues, Buffett definitely thinks the earning power of WFC is strengthened rather than reduced in this crisis. Of course, his remarks carry less weight now than before.
Based on the above, the volatility of WFC's stock price may be back to normal and thus fewer chances for speculation. Personally, I am holding WFC stock long-term but also writing 1-year deep out of money calls, 1-year mediumly deep out of money calls and monthly shallow out of money calls.
My positions are unprotected as the chance of WFC going below $20 is low and Buffett's position should exclude qualitative company risk in WFC. The latter fact means significant dip of WFC represents opportunities rather than risks. The covered calls yield quite nicely and hopefully will keep doing so before WFC's stock price is normalized to above $35.
lazycatcat
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JPM
My calculation of JPM's normalized share price should be $60. JPM's capital ratio and reserve ratio are very high and it is probably hard for JPM keep contributing to the reserve ratio. Once this happens, it is not hard to imagine JPM going to high 40's. Nobody knows when this will happen but it may occur in any quarter of 2010. So, suicidal option bet close to its earning report probably could yield good results.
JPM's deposit cost is equivalent to that of WFC's. BAC is 0.5% higher if I remember correctly. C has no solid deposit base. So, I think keeping an eye on JPM may be fruitful.
My calculation of JPM's normalized share price should be $60. JPM's capital ratio and reserve ratio are very high and it is probably hard for JPM keep contributing to the reserve ratio. Once this happens, it is not hard to imagine JPM going to high 40's. Nobody knows when this will happen but it may occur in any quarter of 2010. So, suicidal option bet close to its earning report probably could yield good results.
JPM's deposit cost is equivalent to that of WFC's. BAC is 0.5% higher if I remember correctly. C has no solid deposit base. So, I think keeping an eye on JPM may be fruitful.
Quantitatively, WFC's earning power is as follows:
1. Pre-tax and Pre-provision revenue $40 B per year.
2. Assuming 1.5% charge-off of $800 B loans (currently at 2.7%), annual charge-off is $12 B
3. Assuming 35% tax rate, net profit is $18 B and is $3.65 per share.
The above number should be well known since Buffett first mentioned the $40 B figure and WFC is at the mark as of 2009. The threshold for WFC to reach above goal should be low in about one or two years. So, WFC should be a $40 per share stock.
The reservation by market is probably due to following factors:
1. Impact of second dip or prolonged recession and thus second financial crisis.
2. Commercial real-estate crisis.
3. Higher interest rate.
4. Issues of integrating Wachovia.
5. Reduced balance sheet and thus earning power.
Issue number 1 has probably the most weight as it threatens the survival or earning power of WFC. Plus, WFC's capital ratio is not rock solid as of today. Its reported earnings of MSR in the scale of $1 B per quarter is not sustainable.
Regardless of all the issues, Buffett definitely thinks the earning power of WFC is strengthened rather than reduced in this crisis. Of course, his remarks carry less weight now than before.
Based on the above, the volatility of WFC's stock price may be back to normal and thus fewer chances for speculation. Personally, I am holding WFC stock long-term but also writing 1-year deep out of money calls, 1-year mediumly deep out of money calls and monthly shallow out of money calls.
My positions are unprotected as the chance of WFC going below $20 is low and Buffett's position should exclude qualitative company risk in WFC. The latter fact means significant dip of WFC represents opportunities rather than risks. The covered calls yield quite nicely and hopefully will keep doing so before WFC's stock price is normalized to above $35.
Thanks a lot for sharing your analysis on the banks. Out of the 4, I like BAC the best due to valuations as well as Merrill. Investment banking recovers the best during economic upswings as M&A heats up.
For now, I am concentrating on DNDN and the two casinos. I am watching a few bios as mentioned before. I don't know if you watched MDVN yesterday. The trial failed and the stock tanked some 70%. Deeply out of the money strangle plays would have been hugely profitable given the gigantic moves. I did not play it but this leads me to do some more analysis in depth on those that will release trial results and try to play a few strangle hands (owning both deeply out of the money calls and puts but have to do them early as the premia are getting very high as the date draws closer and closer).
lazycatcat
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ITMN and bio etc
Thanks for sharing bio information. If the topic becomes sensitive, we could use email to communicate.
As to ITMN, one approach that makes sense to me is to sell Mar $10 put and buy Apr $7.5 put. Max gain is about $0.90 and max loss is about $1.60.
Haven't figured out DNDN yet but keep looking. It is interesting for the stock that falls 70% in one day. Bio is definitely full of actions ...
Thanks for sharing bio information. If the topic becomes sensitive, we could use email to communicate.
As to ITMN, one approach that makes sense to me is to sell Mar $10 put and buy Apr $7.5 put. Max gain is about $0.90 and max loss is about $1.60.
Haven't figured out DNDN yet but keep looking. It is interesting for the stock that falls 70% in one day. Bio is definitely full of actions ...
Thanks for sharing bio information. If the topic becomes sensitive, we could use email to communicate.
As to ITMN, one approach that makes sense to me is to sell Mar $10 put and buy Apr $7.5 put. Max gain is about $0.90 and max loss is about $1.60.
Haven't figured out DNDN yet but keep looking. It is interesting for the stock that falls 70% in one day. Bio is definitely full of actions ...
ITMN FDA review doc is out. Early PM reaction is very positive (up 45% and climbing at 7.41am). I have a strangle of March 17.5 calls and 12.5 puts in mind. But it appears I have missed this one.
Bios are a special field that is very different from the rest. Three key factors in determining valuations: trial results, FDA decisions and market potentials. I suggest you watch more to get a feel before jumping in this pit.
I am still recovering from my jet lag. I will spend more time to study what is forthcoming. There are many opportunities out there. Let's resort to email exchange.
I think MDVN's spetacular fall was way over done. More than the entire float has changed hands on Wed alone. I got a little front-month calls to see if there will be a forceful rebounce in a few days.
What a beautiful day!
Being powered by a fair unemployment report which was followed by a Fed consumer borrowing rise report, bulls took charge and won the day. My two casinos had a steady day in terms of both pps and volume while DNDN appeared to be a bit tired and may need a breather. Lots of actions in bioland too. I managed to day trade a little ITMN puts for a tiny profit but missed the bulk of the gigantic run (regret like hell not to chase PM actions at 8am after reading the FDA review doc. Oh well, that is the pitfall of a non-professional).
Cat: here are two tasks for you. Both XNPT and MDVN suffered colossal falls lately. Both can be huge come-back plays but I would like you to study what other products they offer to support their valuations at current level. These can be done by looking at their quarterly and annual reports. There is also the possibility of buyouts. I will spend some of the weekend to study forthcoming trial results/FDA actions. You may email me your findings.
Have a nice weekend, everyone. The weather is going to be gorgeous.
Being powered by a fair unemployment report which was followed by a Fed consumer borrowing rise report, bulls took charge and won the day. My two casinos had a steady day in terms of both pps and volume while DNDN appeared to be a bit tired and may need a breather. Lots of actions in bioland too. I managed to day trade a little ITMN puts for a tiny profit but missed the bulk of the gigantic run (regret like hell not to chase PM actions at 8am after reading the FDA review doc. Oh well, that is the pitfall of a non-professional).
Cat: here are two tasks for you. Both XNPT and MDVN suffered colossal falls lately. Both can be huge come-back plays but I would like you to study what other products they offer to support their valuations at current level. These can be done by looking at their quarterly and annual reports. There is also the possibility of buyouts. I will spend some of the weekend to study forthcoming trial results/FDA actions. You may email me your findings.
Have a nice weekend, everyone. The weather is going to be gorgeous.
lazycatcat
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Sure, I will take a look and let you know.
Thanks again for sharing bio information and this is definitely an exciting area.
Except for suicidal (kamikaze) option bet, all my option operations need to be cash flow positive. So, I am doing this from a different angle but the target companies are the same.
I don't believe I understand bio area or am able to evaluate any drugs. However, the event driven approach in this area is really interesting and may yield interesting results.
Thanks again for sharing bio information and this is definitely an exciting area.
Except for suicidal (kamikaze) option bet, all my option operations need to be cash flow positive. So, I am doing this from a different angle but the target companies are the same.
I don't believe I understand bio area or am able to evaluate any drugs. However, the event driven approach in this area is really interesting and may yield interesting results.
History has repeated itself again and again and again
Today marks the anniversary of the market low on March 9, 2009. What has this forceful rebound proven yet again? Buy when there is panic in the air and blood on the street! This has been proven many times in just recent memory, be that the Black Monday in october 1987, the Asian Currency Crisis in 1997, the Rubel Crisis in 1998, the Market Crash in 2001, the huge gap down open after 9.11, the March 9, 2009 market low.
During the past year, many stocks have been 10 baggers, 20 baggers, 30 baggers, 40 baggers, 50 baggers ...... I caught quite a few but profit taking has, regretably, made me let them go way too early and thus miss the bulk of the spetacular runs. Today last year was truly an opportunity of a life time. How many more of this kind of opportunities are there ahead? I have no idea.
Two valuable lessons for those who are inclined to participate in the market: 1) let winners run. If you are able to make the right moves and your acquisitions are in the money right away, chances are that you will be ahead of the game in a big way by exercising patience and giving the positions time to work. I have let too many winners go way too early in fear that paper profits may vanish if I don't sell. This is truly the wrong approach to take. To begin with, those paper profits were not mine if I had not bought the stocks. Why worry about some profits that were not mine otherwise? 2) Do careful home work ahead of time and buy when there are panic sells.
Both are easy said than done. I am still learning.
Good luck to everyone!
Today marks the anniversary of the market low on March 9, 2009. What has this forceful rebound proven yet again? Buy when there is panic in the air and blood on the street! This has been proven many times in just recent memory, be that the Black Monday in october 1987, the Asian Currency Crisis in 1997, the Rubel Crisis in 1998, the Market Crash in 2001, the huge gap down open after 9.11, the March 9, 2009 market low.
During the past year, many stocks have been 10 baggers, 20 baggers, 30 baggers, 40 baggers, 50 baggers ...... I caught quite a few but profit taking has, regretably, made me let them go way too early and thus miss the bulk of the spetacular runs. Today last year was truly an opportunity of a life time. How many more of this kind of opportunities are there ahead? I have no idea.
Two valuable lessons for those who are inclined to participate in the market: 1) let winners run. If you are able to make the right moves and your acquisitions are in the money right away, chances are that you will be ahead of the game in a big way by exercising patience and giving the positions time to work. I have let too many winners go way too early in fear that paper profits may vanish if I don't sell. This is truly the wrong approach to take. To begin with, those paper profits were not mine if I had not bought the stocks. Why worry about some profits that were not mine otherwise? 2) Do careful home work ahead of time and buy when there are panic sells.
Both are easy said than done. I am still learning.
Good luck to everyone!
