|
|
|
|
|
 |
|
|
 |
Monday, October 12th, 2009
12:40pm (EST)
The market is moving higher today as the Dow now stands 100 points away from 10,000. Currently, the index is up 37 to 9,901 and traded as high as 9,931 earlier this morning. Trading has been fairly light due to the Columbus Day holiday and the bond markets are closed. There are no major economic reports today so the bulls could make their run in the afternoon.
Exxon Mobil (XOM, $70.25, up $0.98) has busted through $70 and I had mentioned that we missed a trade when the stock traded to a low of $66 last Monday. I listed the November 70 calls (XOMKN, $1.85, up $0.35) outside of the Members Area because they were up 40% that day and I didn’t like the entry price of $1.50.
Since it was sort of a “Free Trade”, I thought I would expand my thoughts on the subject. There is resistance at $71-$72 for the stock and if you got in at $1.50, set stops there. If Exxon can muster up some momentum then shares have a shot at $73-$74 where further resistance comes into play. If the stock is at $73 by November 20th, the November 70′s are worth at least $3; at $74 they are worth $4…
One of our favorite Biotech’s is getting a pop today. It looks like Dendreon (DNDN, $29.38, up $1.90) could be on the move again. On the last day of August, we profiled a Dendreon trade that returned subscribers 100% in a little over two weeks. In March, Dendreon made the move from $5 to $25 and some subscribers made 10x that.
Dendreon will submit its application for Provenge to the FDA in November but today’s jump comes on news that the company added two new directors to its board.
One of them is chief executive of Roche’s Genentech unit and the other is a former Eli Lilly (LLY, $33.88, up $0.10) manufacturing executive. I don’t think we get in today but I’m looking at the option chain to see which ones could benefit the most if a buyout offer is coming…
Speaking of noise, Abercrombie & Fitch (ANF, $35.97, up $1.15) has continued its rebound and is setting up nice for us.
I will be back in the morning with the trade updates and possibly some new gems. Let’s hope the bulls continue to push.
Tags: Abercrombie & Fitch, Dendreon, Eli Lilly, Exxon Mobil, momentum trading, options blog, options mentoring, options track record, Roche
Posted in Company Commentary, Earnings, Hot Stocks, Market Analysis, Mergers and Acquisitions, Oil, Option Trades, Sectors, Strategies | Comments Off
Friday, January 30th, 2009
Roche threw us a curveball this morning and took its bid for Genentech (DNA, $80.95, down $3.14) directly to the shareholders. The company is now offering about $42 billion, or $86.50 a share for Genentech which is $2.50 less than the offer it made last July. Hogwash.
Roche’s attempt to get Genentech at a lower bid is another slap in the face to its shareholders and although Genentech has not made any comments, this camp says Genentech again holds out for more. One top 10 Genentech shareholder is already rebuffing Roche’s new bid and I don’t believe other shareholders will tender the offer either.
From the head brass at Roche: “We are disappointed that the discussions over the last six months between Roche and the special committee of Genentech have not produced a negotiated agreement. We feel it is now time to give the Genentech minority shareholders the opportunity to decide on our offer. Especially in the current market environment the offer provides an opportunity for all public shareholders to achieve liquidity and to receive a fair price for all their shares.”
Fair price? Geez. If Roche offered $89 back in July, why then, the lower offer? Genentech expects to report results in mid-April for its Avastin colon cancer trial, in addition to pending FDA decisions to expand the drug’s use. Roche is trying to get the rest of the company it does not own before that data is released.
We will have to see how this plays out but continue to hold the the February 95 calls (DWNBS, $0.05, down $0.15) and the March 95 calls (DWNCS, $0.25, down $0.35). These positions got hammered today as a result of the lower bid.
I’ll be back over the weekend to provide an update in the Weekly Wrap.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Genentech, Roche
Posted in Option Trades | No Comments »
Monday, January 12th, 2009
Genentech (DNA, $86.34, up $1.94) will be in the headlines a lot this week and there may be an opportunity for a couple of trades. News surfaced late Friday that Switzerland based Roche is preparing a fresh offer for Genentech which it already owns a 56% stake in. The stock was up another $2.66 in after-hours trading to $89.
We have been here before with these two companies and we did rather well playing the news back in the summer. Genentech will report earnings this week and will be presenting at the annual J.P. Morgan health care conference which runs today through Thursday. About 300 companies will be present but Genentech could steal the show.
Here are a few excerpts from the blog back then.
From July 27, 2008:
“Genentech (DNA, $96.00, up $1.35) continued higher throughout the week as it awaits word from a “special committee” that is evaluating the $44 billion bid to buy the company. Swiss pharmaceutical giant Roche is on the other end of that bid and is also waiting for an answer to its $89 a share offer.”
From August 13, 2008:
“Genentech (DNA, $98.53, up $0.68) will not win an academy award for its efforts in “evaluating” take-over offers but give the company credit for at least trying. The “special committee” that has been evaluating the $44 billion bid from Roche said this morning that the deal “substantially undervalues” the company and has been rejected.
This was no surprise as Genentech went on to say it “would consider a proposal that recognizes the value of the company and reflects the significant benefits that would accrue to Roche as a result of full ownership.” The language Genentech is using is sounding like a friendly deal could happen but it’s clear the company is holding out for a $100+ offer.
The August 95 calls (DWNHS, $3.60, up $0.85) continue to do well from an entry price of $1.50 and I mentioned you could ride them through Friday. However, we had set a stop of $3.00 so we were taken out yesterday. The August options expire Friday so make sure if you are still in the trade to close it before the trading session ends.
The September 100 calls (DWNIT, $2.95, up $0.45) were profiled at $0.65 and we have set a stop of $2.00-$2.25. The options closed at $2.50 yesterday so let’s make the $2.25 stop a firm one. I want to allow some room for volatility but I really don’t want the stop to kick in on this one. Genentech continues to set new highs and we want to ride the wave as long as we can.” –
This was six months ago and not much has changed as far as Roche acquiring Genentech except its stock price. The shares went on a slow fade and we were eventually stopped out of the trades but not before some healthy returns.
Roche’s new bid, which is expected to be about $95 a share is not much of a premium and would be another slap in the face to Genentech’s board. Roche is playing dirty and there is talk of a hostile takeover. Roche is giddy about Genentech’s top three drugs: Avastin, Rituxan, and Herceptin and $120 a share is more like a fair offer. I doubt we see it but those three drugs took in sales of over $1.7 billion last quarter as overall revenue came in at $3.4 billion.
Genentech’s pipeline is a force to be reckoned with and Roche knows this. Genentech is expected to report earnings of $0.96 and year-end earnings should come in at $3.40 to $3.45 a share. Despite a solid quarter, Genentech actually missed estimates last time out. No worries. I say let’s ride the Genentech wave higher and here are a few options that will be active.
The January 90 calls (DWNAR, $0.95, up $0.40) traded 10,000 contracts on Friday and expire this Friday. This will be the riskiest of the call options I list so stay away from them. With so many major announcements expected, the February and March call options will provide the same luxury with a little less risk.
The February 95 calls (DWNBS, $0.95, down $0.20) look good up to $1.25 while the March 95 calls (DWNCS, $1.70, down $0.10) look good up to $2.00.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Genentech, Roche
Posted in Company Commentary, Mergers and Acquisitions, Option Trades, Uncategorized | No Comments »
Wednesday, August 13th, 2008
Genentech (DNA, $98.53, up $0.68) will not win an academy award for its efforts in “evaluating” take-over offers but give the company credit for at least trying. The “special committee” that has been evaluating the $44 billion bid from Roche said this morning that the deal “substantially undervalues” the company and has been rejected.
This was no surprise as Genentech went on to say it “would consider a proposal that recognizes the value of the company and reflects the significant benefits that would accrue to Roche as a result of full ownership.” The language Genentech is using is sounding like a friendly deal could happen but it’s clear the company is holding out for a $100+ offer.
The August 95 calls (DWNHS, $3.60, up $0.85) continue to do well from an entry price of $1.50 and I mentioned you could ride them through Friday. However, we had set a stop of $3.00 so we were taken out yesterday. The August options expire Friday so make sure if you are still in the trade to close it before the trading session ends.
The September 100 calls (DWNIT, $2.95, up $0.45) were profiled at $0.65 and we have set a stop of $2.00-$2.25. The options closed at $2.50 yesterday so let’s make the $2.25 stop a firm one. I want to allow some room for volatility but I really don’t want the stop to kick in on this one. Genentech continues to set new highs and we want to ride the wave as long as we can.
Meanwhile, we closed half of the ImClone (IMCL, $64.00, down $0.51) August 45 calls (QCIHI, $19.50, down $0.15) at $19.00 on 8/1 and set a stop of $18.00 on the rest. These calls were profiled at $2.40 and our return is something even Michael Phelps would envy. These options also expire this Friday so we will go ahead and just close this one out today.
I believe both firms will get higher offers but as always it depends on timing. If Genentech continues higher from here, the September 100 calls should continue to do well. As for ImClone, I’m not sure if there is another good trade out there for us or not. I’ll take a look at the option chains and run some figures but for now we will just go with Genentech.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Genentech, Imclone, Mergers and Acquisitions, Roche
Posted in Mergers and Acquisitions | No Comments »
Tuesday, August 12th, 2008
Genentech (DNA, $98.12, up $0.29) has hit an all-time high this morning. Although we still haven’t heard from the company’s “special committee” that is evaluating the $44 billion bid from Roche, there’s a research note out this morning saying Genentech was worth $130 a share.
The analyst went on to say there was an 80% chance of Genentech getting a bid of $105 or higher while the other 20% says a deal falls through and the stock trades back to $86. That a pretty good way of breaking it down I suppose but I mentioned back in July the stock was worth $125.
On 7/22, I profiled the August 95 calls (DWNHS, $3.40, up $0.65) at $1.50 and the September 100 calls (DWNIT, $2.75, up $0.25) at $0.65. At the time I said the August calls were a little riskier because they only had three weeks until expiration but the stock could still trade higher. As I mentioned earlier, I didn’t think we would see another offer from Roche by the time the August 95 call options expire on Friday. They are now up well over 100% and stops should be set at $3.00 to ensure that 100% return. You can ride these calls until Friday but make sure you close them or they will get exercised because they are deep in-the-money.
The September 100 calls have literally been “money” for us. This trade is now up 250% and the calls are still out-of-the-money. In other words, if Genentech trades flat from here on out and doesn’t break $100 by September 19, the calls will be worth zero. The $2.75 is all expensive time premium and will slowly evaporate if Genentech stalls from here.
I don’t think that will happen but you never know. It would wise to set stops on the September calls at in the $2.00-$2.25 range. I’ve still got my fingers crossed for a higher bid although I don’t think one will come by Friday for the August 95 calls to benefit much more. The September 100 calls have the potential to explode if a bid of $105 comes. Then again, they already have exploded if you got them back in July. Stay tuned…
Rick Rouse
Rick@OptionsMentoring.com
Tags: August call options, Genentech, Roche
Posted in Company Commentary, Hot Stocks | No Comments »
|
|
|  | | | |
Get RSS Feed
Dendreon Making Noise Again
Monday, October 12th, 2009
12:40pm (EST)
The market is moving higher today as the Dow now stands 100 points away from 10,000. Currently, the index is up 37 to 9,901 and traded as high as 9,931 earlier this morning. Trading has been fairly light due to the Columbus Day holiday and the bond markets are closed. There are no major economic reports today so the bulls could make their run in the afternoon.
Exxon Mobil (XOM, $70.25, up $0.98) has busted through $70 and I had mentioned that we missed a trade when the stock traded to a low of $66 last Monday. I listed the November 70 calls (XOMKN, $1.85, up $0.35) outside of the Members Area because they were up 40% that day and I didn’t like the entry price of $1.50.
Since it was sort of a “Free Trade”, I thought I would expand my thoughts on the subject. There is resistance at $71-$72 for the stock and if you got in at $1.50, set stops there. If Exxon can muster up some momentum then shares have a shot at $73-$74 where further resistance comes into play. If the stock is at $73 by November 20th, the November 70′s are worth at least $3; at $74 they are worth $4…
One of our favorite Biotech’s is getting a pop today. It looks like Dendreon (DNDN, $29.38, up $1.90) could be on the move again. On the last day of August, we profiled a Dendreon trade that returned subscribers 100% in a little over two weeks. In March, Dendreon made the move from $5 to $25 and some subscribers made 10x that.
Dendreon will submit its application for Provenge to the FDA in November but today’s jump comes on news that the company added two new directors to its board.
One of them is chief executive of Roche’s Genentech unit and the other is a former Eli Lilly (LLY, $33.88, up $0.10) manufacturing executive. I don’t think we get in today but I’m looking at the option chain to see which ones could benefit the most if a buyout offer is coming…
Speaking of noise, Abercrombie & Fitch (ANF, $35.97, up $1.15) has continued its rebound and is setting up nice for us.
I will be back in the morning with the trade updates and possibly some new gems. Let’s hope the bulls continue to push.
Tags: Abercrombie & Fitch, Dendreon, Eli Lilly, Exxon Mobil, momentum trading, options blog, options mentoring, options track record, Roche
Posted in Company Commentary, Earnings, Hot Stocks, Market Analysis, Mergers and Acquisitions, Oil, Option Trades, Sectors, Strategies | Comments Off