Shares of large biotechnology companies posted only slight gains Friday, despite large gains in the market overall. Biotechs have been calm all week, experiencing on average only half the losses seen in the wider market, according to the American Stock Exchange’s Biotechnology Index.
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Later in this article we look at covered call investing ideas in the biotech sector. If you would like more information on covered calls, check out our covered option example. Another great page to look at is the covered call rules of thumb page where the options trading investing experts at Power Options have laid out 12 simple rules to keep in mind when looking for option trades. If you prefer to talk to a live person, the investment experts at Power Options are standing by to provide help with options investing from 9 am to 5 pm EST Monday through Friday at 877-992-7971.
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The Biotech industry is in a calm space right now following recent earnings reports. The next large swath of volatility catalysts for the sector, whether they are Food and Drug Administration decisions or clinical trial results, will likely come in September.
As a comparison, on Friday the Dow Jones industrial average gained 1.8 percent, the Nasdaq rose 2.2 percent, and the S&P 500 gained 2.5%. The Amex biotech index only saw a gain of about a percent and the Nasdaq Stock Market’s biotechnology index, rose about 1.5 percent.
Imclone Systems (IMCL), one of the larger biotechnology stocks, fell nearly 3% to $31.42. This is a company in turmoil since Carl Icahn’s takeover of the company precipitated the departure of the company’s former CEO, Joseph Fischer. A newly appointed CEO, John Johnson, will begin his work on 27 August. Analysts have their antennae up as they watch to see how the newly appointed CEO will fare.
One of the companies posting gains was Human Genome Sciences (HGSI). This Company saw a nearly 5 percent gain on Friday. This company has two studies to test the performance of its key Hepatitis C drug. Study results are due out toward the end of the year, and if they go well the stock may see more healthy gains.
Looking at this News from an Options Trading Perspective:
Let’s assume we are bullish on the Biotech sector and expect see gains in the sector over the next month. This may be a reasonable assumption, but one requiring extensive research to validate. The next step would be for an investor to identify viable trades. Because quality option data is cumbersome and difficult to find, an investor requires the aid of a solid tool to help them sort through the noise; this is where the PowerOption search technology can pay dividends. We think you’ll find the interface easy to use and you’ll be finding desirable option trading ideas in no time. To support this claim, we offer a risk-free 14-day trial.
Potential Trades:
The following Biotech option trades have 36 days until expiration. The search used was PowerOptions‘ SmartSearchXL feature and was screened for in the money Covered Call trades in the Biotechnology sector with expiration dates in September.
This search could easily be modified to screen for over 60 criteria. Also, an investor can use the SmartSearchXL feature to search other bull or bear option trading techniques such as a bull call debit spread or bear call credit spread.
| Power Options Covered Call Search Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Company Name |
Symbol | Stock Price |
Option | Option Details |
Opt. Bid |
Net Debit |
% Dnsd Prot |
% if Unch |
% if Asgnd |
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| Vanda Pharma. Inc. | VNDA | $15.00 | QDXIC | 07 SEP 15.0 (36) | $2.00 | $13.00 | 13.3 | 15.4 | 15.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CV Theraputics Inc. | CVTX | $10.23 | UXCIB | 07 SEP 10.0 (36) | $1.55 | $8.68 | 15.2 | 15.2 | 15.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Momenta Pharmas. Inc. | MNTA | $10.77 | QMPIB | 07 SEP 10.0 (36) | $1.60 | $9.17 | 14.9 | 9.1 | 9.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acadia Pharm. Inc. | ACAD | $15.05 | AQYIC | 07 SEP 15.0 (36) | $1.15 | $13.90 | 7.6 | 7.9 | 7.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repros Therapeutics Inc. | RPRX | $12.74 | UOPIV | 07 SEP 12.5 (36) | $1.15 | $11.59 | 9 | 7.9 | 7.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sangamo Biosciences Inc. | SGMO | $10.05 | UGDIB | 07 SEP 10.0 (36) | $0.75 | $9.30 | 7.5 | 7.5 | 7.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Regeneron Pharma. Inc. | REGN | $18.33 | RQPIW | 07 SEP 17.5 (36) | $2.05 | $16.28 | 11.2 | 7.5 | 7.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acorda Therapeutics Inc. | ACOR | $17.68 | QORIW | 07 SEP 17.5 (36) | $1.35 | $16.33 | 7.6 | 7.2 | 7.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Medarex Inc. | MEDX | $17.61 | MWMIW | 07 SEP 17.5 (36) | $1.25 | $16.36 | 7.1 | 7 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Alnylam Pharma. Inc. | ALNY | $23.29 | AQXIX | 07 SEP 22.5 (36) | $2.25 | $21.04 | 9.7 | 6.9 | 6.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Medivation Inc. | MDVN | $17.78 | QMDIW | 07 SEP 17.5 (36) | $1.40 | $16.38 | 7.9 | 6.8 | 6.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BioCryst Pharmas. Inc. | BCRX | $10.24 | BIUIB | 07 SEP 10.0 (36) | $0.85 | $9.39 | 8.3 | 6.5 | 6.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The trades listed offer between 7.1 and 13.3% downside protection and offer 6.5 to 15.4% potential profit.
Before investing in any of these companies, however, it would be prudent to do more research to discovery if there is any news, earnings results, product test results, or other factors that might adversely affect the stock’s performance.
Competitors:
Competitors for VNDA include: Eli Lilly & Co. (LLY), Johnson & Johnson (JNJ), and Pfizer Inc. (PFE).
Competitors for CVTX include: AstraZeneca plc (AZN), Glaxosmithkline plc (GSK), and Pfizer Inc. (PFE).
Competitors for MNTA include: Sanofi-Aventis (SNY), and Teva Pharmaceutical Industries Ltd. (TEVA).
Competitors for ACAD include: AstraZeneca plc (AZN), Eli Lilly & Co. (LLY), and Pfizer Inc. (PFE).
Competitors for RPRX include: Pfizer Inc. (PFE), Solvay Pharmaceuticals, Inc. (private), and TAP Pharmaceutical Products Inc. (private).
Competitors for SGMO include: Eli Lilly & Co. (LLY), Merck & Co. Inc. (MRK), and Pfizer Inc. (PFE).
Competitors for REGN include: Genentech Inc. (DNA), Abbott GmbH & Co. KG (private), and Hoffmann-La Roche Inc. (private).
Competitors for ACOR include: Cephalon Inc. (CEPH), Teva Pharmaceutical Industries Ltd. (TEVA), and Chiron Corporation (private).
Competitors for MEDX include: Amgen Inc. (AMGN), PDL BioPharma Inc. (PDLI), Regeneron Pharmaceuticals Inc. (REGN), and Avanir Pharmas. (AVNR).
Competitors for ALNY include: Novartis AG (NVS), Valeant Pharmaceuticals International (VRX), Sirna Therapeutics, Inc. (private), and Sirna Therapeutics Inc. (RNAI).
Competitors for MDVN include: Johnson & Johnson (JNJ), Novartis AG (NVS), and Pfizer Inc. (PFE).
Competitors for BCRX include: Glaxosmithkline plc (GSK), and Merck & Co. Inc. (MRK).
For more information about how to identify and research great option trades, visit the PowerOptions website. There you will find the data you need to make quick, clear, and informed decisions. You can trade knowing you have found the best investment. Also, PowerOptions will allow you, with a few quick clicks, to quickly and accurately compare trades. PowerOptions‘ premium customer support is second to none in the industry. They can be easily contacted when you need them at their toll-free number to answer customer questions. Call them now toll free at 877-992-7971.
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[tags] Solvay Pharmaceuticals, Inc., TAP Pharmaceutical Products Inc., Abbott GmbH & Co. KG, Hoffmann-La Roche Inc., Chiron Corporation, Sirna Therapeutics, Inc., AMGN, Amgen Inc., AVNR, Avanir Pharmas., AZN, AstraZeneca plc, CEPH, Cephalon Inc., DNA, Genenntech Inc., GSK, GlaxoSmithKline PLC, HGSI, Human Genome Sciences Inc., IMCL, ImClone Systems Inc, JNJ, Johnson & Johnson, LLY, Lilly (Eli) and Co., MRK, Merck & Co. Inc., NVS, Novartis AG, PDLI, Protein Design Labs Inc., PFE, Pfizer Inc., REGN, Regeneron Pharma. Inc., SNY, Sanofi-Synthelabo, TEVA, Teva Pharma. Indus. Ltd., VRX, Valeant Pharmas. Intl., covered call investing, covered call investment strategy, covered call rules of thumb, covered option example, help with options, investment strategy, options trading, poweroptions [/tags]