Naked Put Trade #5
Update April 23, 2007 (See Below)
I opened a small naked put position yesterday in a company that is bound to see some wild volatility in the coming weeks. Neurochem is currently waiting for the results from its first phase 3 study of “Alzhemed” which is a treatment for Alzheimer’s disease. The results could come any day, and the stock will probably make a major move…but which way, you ask? Ahhh, that is the question. Of course, my bet is not that it will move up or down, but that it will not move down below $5 by May 18. That is all that matters to me. Here is my latest trade:
Mar 19-SOLD TO OPEN MAY 5 PUTS “NRMX” FOR $.70/SHARE
Stock closed at $15.99 on Mar 19, 2007
So the stock needs to drop 69% before May 18, 2007 before I start to lose money. Similar to my AMAG trade, I did not open a very large position here, but I couldn’t pass up the play when I noticed the implied volatility at 185! That is just too much fun. Odds are that I will continue to build this position in the coming days or weeks. Check back for updates.
Update April 23, 2007
I closed this position today because the extra $.10 wasn’t worth holding the options for another 3 weeks. Mark this one up in the win column.
APR 23-BOT TO CLOSE MAY 5 PUTS “NRMX” FOR $.10/SHARE
I held the position for 35 days, cleared $.60/share, and didn’t lose a minute of sleep. I like those.
