Puma Biotechnology (PBYI) Zooms 47%/ Call Options Up 1,300%
We love researching Biotech stocks for a number of reasons. The two most important ones are that we can make money speculating on them and it allows us to discover what drugs are changing the world and saving lives.
When investing in Biotech, you want to try and find companies with strong pipelines or multiple drugs in development for possible call or put options plays. You can also look at Biotech companies that may only have one drug in development and are bleeding cash as possible shorts or as a long position if the on drug could be a blockbuster.
Biotech stocks move up and down based on 1,2, and 3 Phase Trials and analyzing the data is important. During the Trials, companies report their findings to the FDA and on occasions, some drugs are Fast-Tracked, meaning they could be brought to market sooner rather than later.
Puma Biotechnology (PBYI, $68, up $21.79) shares are surging today after announcing Phase 2 Trials went well for its breast cancer drug, Neratinib, and that patients are now eligible for an upcoming Phase 3 Trial.
The December 60 calls (PBYI131221C00060000, $8.40, up $7.80) were thinly traded and closed yesterday’s session at 60 cents. As you can see, they have surged 1,300% and have traded to a high of $12.
We also looked at the January 60 calls (PBYI140118C00060000, $21.50, up $16.80) and noticed they had low open interest. These calls are up over 300% but what is curious was the super high premium as they closed at $4.70 yesterday.
Of course, we weren’t in this trade but it was a company we were familiar with. However, we do have one Biotech company we recommended in November that has doubled. Even better, the options we recommended are pushing a 508% return and could become our biggest trade of the year as we close out 2013. How cool would that be?
Our portfolio is light as we wind down our last batch of trades and wait for Friday’s Nonfarm Payroll report. However, we expect to be busy for the remainder of the year as we have started plotting our next moves into January and February. There are still opportunities to use December options but they expire in 2 weeks so while the returns will be better playing near-term options, the risk is just as great and why we want to use longer-term options for the most part.
We are in GREAT shape to play a pending breakout or breakdown, starting as early as tomorrow but we still have to wait and confirm the price action before getting too aggressive.
We are closing in on our 6th-straight winning year for the newsletter and that is something we are proud of and doubt many option newsletters can say. We are still averaging nearly a 70% win rate for all of our trades and the return on our Daily portfolio is approaching 250% for 2013.
This means a $10,000 investment could be worth $35,000 if you had taken all of our trades this year.
We don’t advertise, or do interviews, radio or TV. We like to stay out of the spotlight and could care less about 15 minutes of fame. Our goal is to TEACH you how the market works and how options can make you an incredible amount of money.
The reason we say this is because this is the month to get the best deal on our newsletter and we only run our current special promotion once a year. Over half of our members use this opportunity to buy a 1-year membership to the Daily and it also includes our update Option Trading Course along with ongoing videos. The course is priced at $899 and is included at NO CHARGE with all 1-year subscriptions.
We will be doing a video this weekend if time permits or next weekend so it is important to get on board now if you really want an options education. We also have auto-trading partners that will take all of our trades for you, in your account, so if you are a busy professional you can enjoy our service without being actively involved.
Back to the market…
We mentioned on Tuesday we expected Wednesday and Thursday to be flat days in the market and despite the volatility, that forecast remains on track.
The Dow is down 18 points to 15,871 while the S&P 500 is lower by 3 points to 1,790. The Nasdaq is higher by 4 points to 4,041.
We have a New Trade we are getting into and tomorrow should be exciting! Subscribers, hit the Members Area for the updates and stay locked-and-loaded for the remainder of the session in case we see other trades we like.