One of the nice things about selling covered calls is that when a stock goes down, you can buy back the calls you sold, at a profit.
That is exactly what I did today for the Port; I had sold 6 Oct $35 DNDN contracts for $84 each and bought them back today for $20 each -- $350 profit after commissions.
Then I turned around and sold 6 Oct $28s for $100 each.
Do not get me wrong, Dendreon is still a stock I want to own. But I do not believe it will be above $28 in the middle of October. They announced yesterday that the amended BLA will not be filed until the middle of November, and so I just don't see any real gains through then. If we see a spike downwards, I very well may simply buy these back too...
I also bought (for the Port) 2000 AOB at $4.83 and sold the Oct $5s for $20 each. [disclosure: I also did this today in my real IRA with 1000 shares...]
I did well in selling ALTH - they did get approval, as I thought, but revenue and profits are going to be a few months away and so the market did not treat Allos very well today. As a 6 month stock, I think buying today would be a good thing, but it is not quite right for the Port today.
ARNA is also a screaming buy today. Note it could well drop some more in the next week but at $4.60 a share there is too much upside to ignore it. I have a sizeable stake in the Port already, so will not be buying, but it could make readers very happy one month (Obesity conference at the end of October) and one year (FDA approval) out.
Regards,
Trond
Friday, September 25, 2009
Wednesday, September 23, 2009
More Port24 calls...
Busy day at lunch.
I sold the remaining 800 ALTH shares at $8.50. The decision date is tomorrow and while I believe they will get approved, the Port wants a steady 2% a month return, not the uncertainty of FDA politics. This is up from the $7.99 purchase price (as well as the premiums on the September calls) so I am ahead of the game.
I also bought 1000 more MELA. The FDA date is 12/7, so the Oct and Nov calls are going to be free money while we wait.
I sold the following calls:
DNDN - 6 Oct $35s for $0.84 (2.8% return)
ELN - 10 Oct $8s for $0.15 (2%)
MELA - 10 Nov $10s for $1.20 (12%, or 6% monthly)
ARNA - 29 Oct $5s for $0.40 (7.5%)
SGMO - 15 Oct $10s for $0.25 (2.8%)
I think the MELA and ARNA calls are the best play of all right now. The stocks may go down slightly but you keep the premium and the stock should recover before the expiration. And of course, if the stock stays where it's at, the premium is pure profit. 6 and 7% a month is nothing to sneeze at!
The Port is now at $138,700 -- a 28.4% annualized return. I have $12,653 in cash and the following positions:
Stock (calls written)
2000 NBIX
1600 ELN (10)
1000 DNDN (6)
2500 SGMO (15)
400 BCRX
4900 ARNA (29)
200 AMAG
2000 MELA (10)
Regards,
Trond
I sold the remaining 800 ALTH shares at $8.50. The decision date is tomorrow and while I believe they will get approved, the Port wants a steady 2% a month return, not the uncertainty of FDA politics. This is up from the $7.99 purchase price (as well as the premiums on the September calls) so I am ahead of the game.
I also bought 1000 more MELA. The FDA date is 12/7, so the Oct and Nov calls are going to be free money while we wait.
I sold the following calls:
DNDN - 6 Oct $35s for $0.84 (2.8% return)
ELN - 10 Oct $8s for $0.15 (2%)
MELA - 10 Nov $10s for $1.20 (12%, or 6% monthly)
ARNA - 29 Oct $5s for $0.40 (7.5%)
SGMO - 15 Oct $10s for $0.25 (2.8%)
I think the MELA and ARNA calls are the best play of all right now. The stocks may go down slightly but you keep the premium and the stock should recover before the expiration. And of course, if the stock stays where it's at, the premium is pure profit. 6 and 7% a month is nothing to sneeze at!
The Port is now at $138,700 -- a 28.4% annualized return. I have $12,653 in cash and the following positions:
Stock (calls written)
2000 NBIX
1600 ELN (10)
1000 DNDN (6)
2500 SGMO (15)
400 BCRX
4900 ARNA (29)
200 AMAG
2000 MELA (10)
Regards,
Trond
Friday, September 18, 2009
ARNA and the Port24
ARNA had an exciting day. The BLOSSOM results were not quite as good as I hoped - but they will still file an NDA by the end of the year, and should get lorcaserin approval for weight loss.
I expect the shares will be volatile in the next couple months, but should creep upwards to ~$6 or $7 by this time next month.
The Port 24, after options expiration today, is on track.
I was exercised out of the ALTH $7.50 calls, but still have 800 shares that I had sold covered calls against at $10. The $7.50s were very good to me, as I bought the shares at $7.99 and sold the $7.5 strike for $1.65. That is a nice, 14% one month return!
ARNA $6 calls and MELA $10 calls expired, so I was able to keep the full premium (each at around 4%).
The Port is now worth $136,232.09, at a annualized return of 26.8%.
2000 NBIX
1600 ELN
1000 DNDN
2500 SGMO
400 BCRX
1000 MELA
4900 ARNA
200 AMAG
800 ALTH
Cash = $12,550
I expect the shares will be volatile in the next couple months, but should creep upwards to ~$6 or $7 by this time next month.
The Port 24, after options expiration today, is on track.
I was exercised out of the ALTH $7.50 calls, but still have 800 shares that I had sold covered calls against at $10. The $7.50s were very good to me, as I bought the shares at $7.99 and sold the $7.5 strike for $1.65. That is a nice, 14% one month return!
ARNA $6 calls and MELA $10 calls expired, so I was able to keep the full premium (each at around 4%).
The Port is now worth $136,232.09, at a annualized return of 26.8%.
2000 NBIX
1600 ELN
1000 DNDN
2500 SGMO
400 BCRX
1000 MELA
4900 ARNA
200 AMAG
800 ALTH
Cash = $12,550
Thursday, September 17, 2009
Dendreon and the Port24
Pete, selling is ALWAYS the hard thing to call.
One of the best things I think you can do is keep a trading journal, and when you buy something, write down what you expect and why you would sell.
I freely admit I have blinders on when it comes to Dendreon (and Elan). However, I have called DNDN the "safest one year stock" for a reason - within a year I see a fairly easy double. If I went into revenue projections and P/E or P/S ratios I could easily show how Dendreon could be worth $100 in 2 years, or way more than that beyond because of the pipeline. This is a retirement stock - akin to folks who bought Amgen two decades ago. (how's that for a pump!)
I have to say with today's volume and price, there may be news coming this weekend. At this point, if you would LIKE to have some Dendreon in your portfolio, I do not think I would sell.
---
I also want to mention that as of today, the Port 24 has a 34% return, or on an annualized basis, 25%. I have (finally) achieved the 24%+ returns I have been aiming for. In the coming months I will be much more aggressive on the covered calls and NOT simply waiting for price appreciation of the underlying shares.
Regards,
Trond
One of the best things I think you can do is keep a trading journal, and when you buy something, write down what you expect and why you would sell.
I freely admit I have blinders on when it comes to Dendreon (and Elan). However, I have called DNDN the "safest one year stock" for a reason - within a year I see a fairly easy double. If I went into revenue projections and P/E or P/S ratios I could easily show how Dendreon could be worth $100 in 2 years, or way more than that beyond because of the pipeline. This is a retirement stock - akin to folks who bought Amgen two decades ago. (how's that for a pump!)
I have to say with today's volume and price, there may be news coming this weekend. At this point, if you would LIKE to have some Dendreon in your portfolio, I do not think I would sell.
---
I also want to mention that as of today, the Port 24 has a 34% return, or on an annualized basis, 25%. I have (finally) achieved the 24%+ returns I have been aiming for. In the coming months I will be much more aggressive on the covered calls and NOT simply waiting for price appreciation of the underlying shares.
Regards,
Trond
Wednesday, September 16, 2009
Dendreon target
Pete asked about a price target for Dendreon (DNDN).
I hate the concept of targets, because people will always have different time frames and objectives.
If Dendreon hits $32.17 intraday, but closes at $31.81, and I have a $32 target, is that a "hit"? If it does that tomorrow but my target is a end-of-year 2009 $33 and it never quite breaks $33, is that a miss?
Not picking on you, Pete - just need to know where you are coming from in terms of why you want a price target. Now let's say you bought a mess of shares a couple days ago when the stock price went up 15% and you want a short term trade that gets you out with some chance of profit and safely, protecting your principal. THAT is a legitimate reason, and answerable (although of course, only in my opinion).
So here we go!
First, realize there have been a bunch of biotech conferences recently, and Dendreon has scheduled an Analyst Day in NY on 9/24. So word is getting out about Provenge, and there is always the chance of a blockbuster partnership agreement, or further trial info. So it's not surprising it's been "frothy" lately.
The company has basically promised that they will be reviewing commercialization plans at the presentation. I hope they will give more color on pricing and production quantity per quarter. Armd with more information, the expectation is that the analysts will be blown away with the amount of revenue Dendreon may make even as quickly as next summer, and raise their price targets -- which may make more funds and institutions buy in.
I actually expected us to stay under $25 through this Friday (option expiration) and would not be surprised at all to see us dip down there again. But, we should stay between $24 and $28 up through the Analyst Day presentation.
IF the company announces by 10/1 that they have submitted the amended BLA to the FDA for Provenge, then I would think we'll stay at $25 as a floor, and we make hit the $30s through the fall.
But -- allow me to stop speculating on a monthly basis: by June 30, 2010 Provenge will be approved and we should have a Rest-of-World partnership agreement. Those two events should lift us safely out of the $30s - I expect in one year (9/16/2010) the share price will be around $45-50 - nearly a double from here. Note there could easily be spikes, bringing us much higher than that for a day or two.
I would hold on to any shares you have - if they are earmarked longer-term. If you bought some purely to make some short term profit - I'd lock in gains now. Analyst expectations are always hard to read -- you may leave $2 on the table but we could easily sink $2 for the next couple months also.
Regards,
Trond
I hate the concept of targets, because people will always have different time frames and objectives.
If Dendreon hits $32.17 intraday, but closes at $31.81, and I have a $32 target, is that a "hit"? If it does that tomorrow but my target is a end-of-year 2009 $33 and it never quite breaks $33, is that a miss?
Not picking on you, Pete - just need to know where you are coming from in terms of why you want a price target. Now let's say you bought a mess of shares a couple days ago when the stock price went up 15% and you want a short term trade that gets you out with some chance of profit and safely, protecting your principal. THAT is a legitimate reason, and answerable (although of course, only in my opinion).
So here we go!
First, realize there have been a bunch of biotech conferences recently, and Dendreon has scheduled an Analyst Day in NY on 9/24. So word is getting out about Provenge, and there is always the chance of a blockbuster partnership agreement, or further trial info. So it's not surprising it's been "frothy" lately.
The company has basically promised that they will be reviewing commercialization plans at the presentation. I hope they will give more color on pricing and production quantity per quarter. Armd with more information, the expectation is that the analysts will be blown away with the amount of revenue Dendreon may make even as quickly as next summer, and raise their price targets -- which may make more funds and institutions buy in.
I actually expected us to stay under $25 through this Friday (option expiration) and would not be surprised at all to see us dip down there again. But, we should stay between $24 and $28 up through the Analyst Day presentation.
IF the company announces by 10/1 that they have submitted the amended BLA to the FDA for Provenge, then I would think we'll stay at $25 as a floor, and we make hit the $30s through the fall.
But -- allow me to stop speculating on a monthly basis: by June 30, 2010 Provenge will be approved and we should have a Rest-of-World partnership agreement. Those two events should lift us safely out of the $30s - I expect in one year (9/16/2010) the share price will be around $45-50 - nearly a double from here. Note there could easily be spikes, bringing us much higher than that for a day or two.
I would hold on to any shares you have - if they are earmarked longer-term. If you bought some purely to make some short term profit - I'd lock in gains now. Analyst expectations are always hard to read -- you may leave $2 on the table but we could easily sink $2 for the next couple months also.
Regards,
Trond
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