Hi - does anyone know why the December Options have such a high volatility? Seems like there might be a calendar or vertical spread opportunity to be taken advantage of.
Samantha
NFLD makes blood replacement to be used when no real blood is available. Seems like a pretty cool alternative... considering. It is supposed to have a longer shelf life than blood, I don't believe it needs refrigeration... so it has some really interesting applications for war and such. And I must say that if this does work, and it can keep the blood bank from calling me every month... I'm behind it 100%! ;)
BUT it is meeting with a great deal of outcry from the press, which has pointed out that cities included in the test are not required to get approval from their patients. I'm assuming that these patients are unconscious and this is a last ditch alternative. If it's used in hospitals on patients that can reject the use ... and they are not asked... that's gonna be bad. There also may be health related issues ... like deaths... that have come about after it's use, but I'm not sure how anyone will be able to tie the cause and affect ... if the person was dying in the first place. (Seems like a bit of a "Taser" type dilemma ...)
So ... I like the concept. And, I see how it can have it's issues.
The stock is currently trading around the 12.50 strike. And, when I look at the options for December/January, it looks like the options market thinks it's either going up to 15 (or higher) or down to 10 (or lower) over the next 2 months.
The open interest of calls and puts in those 2 months are huge and it seems really split. At the money 12.50 calls and puts in those 2 months have an implied volatility of right around 200. The IVs fall gradually off until Jan09, where the IV is right around 80.
Does anyone know of a reason why it would be compelled to go in either direction over the next 2 months?
Here's my chart analysis.
On the weekly chart, it looks like the long term downtrend has been broken and it is sitting on the new trendline @ 12.50
On the daily chart, if it can stay above the support @ 12, then it should go back up to resistance level around 15 or 16.
(//)
Guide me Landrew!
Samantha
NFLD is trading at 13.20. 50 day simple moving average is @ 13.38. I still can't figure out which direction this should go, but if it can get above 13.38, my best guess would be higher. Still no news.
NFLD was able to get above 13.38... but it couldn't stay above that level. So, I'm just sitting here ... WAITING FOR SOME NEWS!!!!!
OK ... this one continues to perplex me. I've been looking at the option distribution across the strikes calls/puts for December and January. For analysis, I just combined the 2 months.
My burning question is - - Why are people willing to PAY $3 to buy
OR sell the stock at $12.50?
From looking at the options below, this is what I've deduced so far...
*There are twice as many calls than PUTS in both the open interest and the volume.
*The PUTS are convinced it's going absolutely no higher than 15.
*The CALLS think it could trade from 7.50 - 30 with unusually heavy Open Interest at $15, $17.50 ... and $25?? 15 and 17.50 are relatively close to the money. Not sure what to make of the $25 strike.
Does anyone know how I should be interpreting this? The PUTS look organized in their strikes. The Calls are all over the place.
Call Strike Open Vol Put Strike Open Vol
2.5 31 0 2.5 359 0
5 611 10 5 15,397 140
7.5 4,468 627 7.5 17,236 253
10 4,002 14 10 14,435 205
12.5 9,169 432 12.5 8,839 189
15 26,653 292 15 12,347 53
17.5 25,162 254 17.5 950 0
20 17,018 280 20 833 10
22.5 15,797 70 22.5 184 0
25 27,708 0 25 690 0
30 9,681 0 30 662 0
totals: 140,300 1,979 71,932 850
Samantha
Vector Vest rates it a hold right now, but those open interest numbers are amazing at 15 - 20! I wrote calls on this a couple yrs ago and it tanked so I haave stayed away...it looks like they are still burning cash in a big way.
VectorVest Stock Analysis of Northfld Labs as of 11/17/2006
This report has five major sections.
Capital Appreciation Analysis
Dividend Analysis
Price-Volume Data
Sales / Market Capitalization Information
Summary
The ticker symbol for Northfld Labs is NFLD. NFLD is traded on the NASDAQ - (xO) and options are available for this stock
Business: NORTHFIELD LABORATORIES INC, (NFLD) researches and develops a safe and effective alternative to transfused blood for use in the treatment of acute blood loss. The company's blood substitute product, PolyHeme, is a solution of chemically modified hemoglobin derived from human blood.
Business Sector: NFLD has been assigned to the Drug Business Sector. VectorVest classifies stocks into over 200 Industry Groups and 40 Business Sectors.
Industry Group: NFLD has been assigned to the Drug (Biomedical\Genetic) Industry Group. VectorVest classifies stocks into over 200 Industry Groups and 40 Business Sectors.
Capital Appreciation Analysis Back to top
Value: Value is a measure of a stock's current worth. NFLD has a current Value of $2.24 per share. Therefore, it is overvalued compared to its Price of $13.02 per share. Value is computed from forecasted earnings per share, forecasted earnings growth, profitability, interest, and inflation rates. Value increases when earnings, earnings growth rate and profitability increase, and when interest and inflation rates decrease. VectorVest advocates the purchase of undervalued stocks. At some point in time, a stock's Price and Value always will converge.
RV (Relative Value): RV is an indicator of long-term price appreciation potential. NFLD has an RV of 0.29, which is very poor on a scale of 0.00 to 2.00. This indicator is far superior to a simple comparison of Price and Value because it is computed from an analysis of projected price appreciation three years out, AAA Corporate Bond Rates, and risk. RV solves the riddle of whether it is preferable to buy High growth, High P/E stocks, or Low growth, Low P/E stocks. VectorVest favors the purchase of stocks with RV ratings above 1.00.
RS (Relative Safety): RS is an indicator of risk. NFLD has an RS rating of 0.83, which is poor on a scale of 0.00 to 2.00. RS is computed from an analysis of the consistency and predictability of a company's financial performance, debt to equity ratio, sales volume, business longevity, price volatility and other factors. A stock with an RS rating greater than 1.00 is safer and more predictable than the average stock in the VectorVest database. VectorVest favors the purchase of stocks of companies with consistent, predictable financial performance.
RT (Relative Timing): RT is a fast, smart, accurate indicator of a stock's price trend. NFLD has a Relative Timing rating of 1.12, which is good on a scale of 0.00 to 2.00. RT is computed from an analysis of the direction, magnitude, and dynamics of a stock's price movements over one day, one week, one quarter and one year time periods. Once a stock's price has established a strong trend, it is expected to continue in that trend for the short-term. If a trend dissipates, RT will gravitate toward 1.00. RT will explode from bottoms, dive from tops, and reflect changes in price momentum. VectorVest favors the purchase of stocks with RT ratings above 1.00.
VST (VST-Vector): VST is the master indicator for ranking every stock in the VectorVest database. NFLD has a VST rating of 0.86, which is fair on a scale of 0.00 to 2.00. VST is computed from the square root of a weighted sum of the squares of RV, RS, and RT. Stocks with the highest VST ratings have the best combinations of Value, Safety and Timing. These are the stocks to own for above average, long-term capital appreciation. VectorVest advocates the purchase of safe, undervalued stocks rising in price.
Recommendation (REC): VectorVest gives a Buy, Sell, Hold recommendation on every stock, every day. NFLD has a Hold recommendation. REC reflects the cumulative effect of all the VectorVest parameters working together. These parameters are designed to help investors buy safe, undervalued stocks rising in price. They also help investors avoid or sell risky, overvalued stocks falling in price. VectorVest recommends that investors buy high VST-Vector, Buy-rated stocks in rising markets.
Stop (Stop-Price): Stop is an indicator of when to sell a long position or cover a short position. NFLD has a Stop of $12.28 per share. This is $0.74 below NFLD's current closing Price. A stock's Stop is computed from a 13 week moving average of its closing prices, and is fine-tuned according to the stock's fundamentals. High RV, high RS stocks have lower Stops, and low RV, low RS stocks have higher Stops. In the VectorVest system, a stock gets a 'B' or 'H' recommendation if its Price is above its Stop and an 'S' recommendation if its Price is below its Stop.
GRT (Earnings Growth Rate): GRT reflects a company's one to three year forecasted earnings growth rate in percent per year. NFLD has a forecasted Earnings Growth Rate of 3.00%, which VectorVest considers to be poor. GRT is computed from historical, current and forecasted earnings data. It is updated each week for every stock in the VectorVest database. GRT often foretells a stock's future price trend. If a stock's GRT trend is upward, the stock's price will likely rise. If GRT is trending downward, the stock's Price will probably fall. VectorVest favors the purchase of stocks whose GRT is rising and is greater than the sum of current inflation and interest rates, (7.07%).
EPS (Earnings per Share): EPS stands for leading 12 months Earnings Per Share. NFLD has a forecasted EPS of $-0.75 per share. VectorVest determines this forecast from a combination of recent earnings performance and traditional fiscal and/or calendar year earnings forecasts.
P/E (Price to Earnings Ratio): P/E is a popular measure of stock valuation which shows the dollars required to buy one dollar of earnings. NFLD has a P/E of -17.36. This ratio may be deemed to be high or low depending upon your frame of reference. The average P/E of all the stocks in the VectorVest database is 27.97. P/E is computed daily using the formula: P/E = Price/EPS.
EY (Earnings Yield): EY reflects earnings per share as a percent of Price. EY is related to P/E via the formula, EY = 100 / (P/E), and may be used in place of P/E as a measure of valuation. EY has the advantages that it is always determinate and can reflect negative earnings. NFLD has an EY of -5.73 percent. This is below the current average of 3.57% for all the stocks in the VectorVest database. EY equals 100 x (EPS/Price).
GPE (Growth to P/E Ratio): GPE is another popular measure of stock valuation. It compares earnings growth rate to P/E ratio. NFLD has a GPE rating of -0.17. High growth stocks are believed to be able to justify high P/E ratios. A stock is commonly considered to be undervalued when GPE is greater than 1.00 and overvalued when GPE is below 1.00. Unfortunately, this rule of thumb does not take into account the effect of interest rates on P/E ratios. The operative GPE ratio of 1.00 is valid when and only when interest rates equal 10%. With long-term interest rates currently at 5.77%, the operative GPE ratio is 0.33. Therefore, NFLD may be considered to be overvalued.
Dividend Analysis Back to top
DIV (Dividend): VectorVest reports annual, regular, cash dividends as indicated by the most recent payments. Special distributions, one-time payments, stock dividends, etc., are not generally included in DIV. NFLD does not pay a dividend.
DY (Dividend Yield): DY reflects dividend per share as a percent of Price. NFLD does not pay a dividend, so it does not have a Dividend Yield rating. . DY equals 100 x (DIV/Price). It is useful to compare DY with EY. If DY is not significantly lower than EY, the dividend payment may be in jeopardy.
DS (Dividend Safety): DS is an indicator of the assurance that regular cash dividends will be declared and paid at current or at higher rates for the foreseeable future. NFLD does not pay a dividend, so it does not have a Dividend Safety rating . Stocks with DS values above 75 typically have RS values well above 1.00 and EY levels that are much higher than DY.
DG (Dividend Growth Rate): Dividend Growth is a subtle yet important indicator of a company's financial performance. It also provides some insight into the board's outlook on the company's ability to increase earnings. NFLD does not pay a dividend, so it does not have a Dividend Growth rating .
YSG (YSG-Vector): YSG is an indicator which combines DIV, DY and DG into a single value, and allows direct comparison of all dividend-paying stocks in the database. NFLD does not pay a dividend, so it does not have a YSG rating . Stocks with the highest YSG values have the best combinations of Dividend Yield, Safety and Growth. These are the stocks to buy for above average current income and long-term growth.
Price-Volume Data Back to top
Price: NFLD closed on 11/17/2006 at $13.02 per share
Open: NFLD opened trading at a price of $13.37 per share on 11/17/2006.
High: NFLD traded at a High price of $13.40 per share on 11/17/2006.
Low: NFLD traded at a Low price of $12.90 per share on 11/17/2006
Close: NFLD closed trading at price $13.02 per share on 11/17/2006. (Close is also called Price in the VectorVest system)
Range: Range reflects the difference between the High and Low prices for the day. NFLD traded with a range of $0.50 per share on 11/17/2006.
$Change: NFLD closed down 0.16 from the prior day's closing Price.
%PRC: NFLD's Price changed -1.21% from the prior day's closing price.
Volume: NFLD traded 558,681 shares on 11/17/2006.
AvgVol: AvgVol is the 50 day moving average of daily volume as computed by VectorVest. NFLD has an AvgVol of 406,700 shares traded per day.
%Vol: %Vol reflects the percent change in today's trading volume as compared to the AvgVol. %Vol equals ((Volume - AvgVol) / AvgVol ) * 100. NFLD had a %Vol of 37.37% on 11/17/2006
CI (Comfort Index): CI is an indicator which reflects a stock's ability to resist severe and/or lengthy price declines. NFLD has a CI rating of 0.74, which is poor on a scale of 0.00 to 2.00. CI is quite different from RS in that it is based solely upon a stock's long-term price history. VectorVest advocates the purchase of high CI stocks.
Sales / Market Capitalization Information Back to top
Sales: NFLD has annual sales of $
Sales Growth: Sales Growth is the Sales Growth Rate in percent over the last 12 months. NFLD has a Sales Growth of 14.00% per year. This is good. Sales Growth is updated each week for every stock. It is often useful to compare Sales Growth to Earnings Growth to gain an insight into a company's operations.
Sales Per Share (SPS): NFLD has annual sales of $0.00 per share. SPS can be used as a measure of valuation when comparing stocks within an Industry Group.
Price to Sales Ratio (P/S): NFLD has a P/S of 0.00. This ratio is also used as a measure of valuation. Here, too, it is useful when comparing stocks within an Industry Group.
Shares: NFLD has 26,000,000 shares of stock outstanding.
Market Capitalization: NFLD has a Market Capitalization of $348,000,000. Market Capitalization is calculated by multiplying price times shares outstanding.
Summary Back to top
NFLD is overvalued compared to its Price of $13.02 per share, has somewhat below average safety, and is currently rated a Hold.
The basic strategy of VectorVest is to buy Low risk, High reward stocks. We suggest that Prudent investors buy enough High Relative Value, High Relative Safety stocks to keep the overall RV and RS ratings of their portfolios above 1.00. As you do this, you'll find that your risk will go down and your investment performance will improve.
Rich
Thanks for that! That's very cool. I'll have to add that site to my list of resources. Vector Vest is really thorough ... doesn't like this stock in the slightest. I need to figure out how I can incorporate all of that information. These seem like two key tidbits:
NFLD has a current Value of $2.24 per share.
NFLD has a Stop of $12.28 per share - (as of Friday, that's exactly where my daily support line is drawn...hu...)
I just listened to the conference call they had on Nov 7th/8th with Cowan and company. I think the reason for the high volatility in those options is because they have yet to provide details about their Phase III trial Top Line Data ... which is due out Q406 ... and that should be any time now until the end of the year. With that kind of announcement pending ... the options in Dec/Jan really should be high. If this is their only product, that announcement should make or break the company.
After they post those findings, they'll need to prepare/submit their study report in the first half of 07. Explains why those options are also expensive compared to Jan09 Leaps.
They reported their last earnings on 10/10/06 and the stock has fallen off ever since. If they report on time, then they should report again on or around 1/10/07.
I wonder how the quiet period for earnings works when you have major announcements like trial data and such...
Anyway - a couple things I thought were interesting from the call
*They have the building that will take them from 10K pints to 100K pints/yr
*They calculate US demand to be between 400-500K pints per year ... which would be their next level of expansion ... and that would essentially give them a monopoly, near term, if they could meet demand. Right?
*The burden of proof in their study seems pretty low to me. The don't have to prove "superiority" to blood ... though if they could I'm sure the stock would go nuts. They just have to prove "noninferiority".
I think this one is boiling down to ... no guts no glory. Everything to make those options go one way or the other will happen in the next couple months. If I can't figure out a way to take advantage of the volatility skew soon, that opportunity will dissappear. I need a crystal ball...
hey samantha,
Just wanted to say that it is nice to have a new member on here actively contirbuting with new picks, as well as a different way of looking at things! Hope you stick around and learn a lot, as I think we all have! Not too sure about NFLD, particularly re: their option prices etc, as I don't ply options.
However I do like that bounce at the base of the channel, and am kicking myself that I didn't se your thread earlier, as it looks to be a clear bounce from support. A call (or long) strategy looking to sell near the top of the channel may be worthwhile, though obviously if you aen't in now, a fair bit of that has already been made.
Anyway, I'll have a closer look at this this weekend, when I have more time.
ST
Hi ST!
It's nice to be here. I've learned so much already about charting. I thought I was pretty "technical" ... but you people wave flags, banners, triangles and draw all sorts of lines... and I have no clue. Time to pull out the books and brush up!
I think NFLD might be a good interday trade ...in the channel. But I'm not so sure I'd be able to sleep if I held it over night... I have this sinking feeling it's going to be one of those stocks that you buy and then wake up the next day and it's either really high or really low. OR ... worse yet.... one of those stocks that gets halted. God I hate it when they halt stocks... it's just such a helpless feeling and you're wide awake when it happens. Like a trip to the dentist without pain killer ;) Any insight you might have to push me in one direction or the other would be awesome.
I like looking at the options because they usually give an indication of what people think is going to happen. People in the present are buying the future direction. And ... if they're cheep, they can sometimes make big stocks feel like penny stocks.
I just wish that when they bought or sold the options, they had to log their reasoning. Like ... "I'm buying calls cause I think this is going to the moon ... OR... I'm buying calls to protect me from an upside surprise, cause I think this stock is going to hell in a handbasket so I'm planning to short the stock to zero!!!!" Now THAT would be REALLY helpful information. hahahHAHAHAHAH!!!
Samantha
OH ... and one more thing that the options do is help create resistance and support right around the strike prices. If there's a TON of options at like the $12.50 strike, the stock should have a hard time getting through that level.
As the stock rises to that level, then everyone who sold naked puts will either need to cover their puts or sell the stock so they are ready to take delivery if they get exercised. AND If the stock can break through that level, then everyone who sold naked calls will either need to cover their calls or buy the stock so they can deliver if they're exercised.
So you get sort of nasty bump on the head at resistance on the way up and if it makes it through, you can get a quick run up and then that strike can help provide support.
And ... as you get close to expiration, those options have a tendency to pull the stock towards a near by strike and peg it there until expiration.
I think it's cool ... even if you never trade options...
-Samantha
OK ... so I've run the numbers with Friday's figures... against all the Option strategies that I "understand". I came up with 2 ideas.
The first idea: A good strategy MIGHT be to do a Long PUT Butterfly:
The options are in December - they will expire at the close on December 15th.
You risk $240 to make at most $260.
You start losing money if the stock goes above $15.10 OR below $9.90
Between $9.90 & $15.10 you'll have a profit - that's a pretty big window ... but like I mention below, announcements could really throw this stock for a loop.
Greatest profit is achieved if the stock price at the December expiration is exactly $12.50
At expiration, either the calls will be worthless or the puts will be worthless. If the stock is exactly $12.50, all the options will expire worthless ... that would be the best of all worlds. You would get to keep all of your net credit from the transaction.
OK ... so you could probably daytrade around that $12.50 strike to hedge ... but boy you'd have to really be careful doing that. You'd leave yourself open to all sorts of normal shorting issues. For example ... Let's say the stock is falling and you sell it at $12.50 ... then you go off to beddy bye ... wake up the next morning and the stock is at $60. You're butterfly isn't going to help you get out of that mess. You'll have sold at $12.50 and have to buy back at $60 ... and the butterfly will also be in the losing zone ... so you're out another $240. That would be BAD BAD BAD!!!! And ... there's always the possibility they can halt the stock mid day. Those are so painful. So, if you choose to use this strategy.... its robably best to just put on the trade and let it do it's thing.
I would try to close the leg of the Butterfly that is in the money, prior to expiration, so you don't have to deal with being exercised and let the losing half expire worthless.
-Samantha
(//)
Here's the second idea: A good strategy MIGHT be to do a Long Iron Butterfly:
The options are in January07- they will expire at the close on January 19th 2007
You risk $65 to make at most $185.
You start losing money if the stock goes above $16.85 OR below $8.15
Between $8.15 & $16.85 you'll have a profit - that's a bigger window than you get with the Long Put Butterfly ... but like I mention below, announcements could really throw this stock for a loop.
Greatest profit is achieved if the stock price at the January expiration is between $10 and $15.
With this strategy, at expiration, the calls can be worthless or the puts can be worthless. If the stock is between $10 and $15 all the options will expire worthless ... that would be the best of all worlds. You would get to keep all of your net credit from the transaction.
Here again ... you could probably daytrade around that $10 and $15 strikes to hedge ... but you'd have to really be careful doing that. You'd leave yourself open to all sorts of normal shorting issues. For example ... Let's say the stock is falling and you sell it at $10 ... then you shut off your computer... call it a week ... come back on Monday and the stock is at $60. You're butterfly isn't going to help you get out of that mess. You'll have sold the stock at $10 and have to buy back at $60 ... and the butterfly will also be in the losing zone ... so you're out another $65. That would be SAD SAD SAD!!!! And ... there's always the possibility they can halt the stock mid day. Those are so painful. So, if you choose to use this strategy.... its robably best to just put on the trade and let it do it's thing.
My exit strategy for this trade would be to try and let both legs expire worthless if the stock is trading between $10 and $15. But if it's over $15, I'd close that leg and let the other leg expire. If it's trading below $10, I'd close that leg and let the other leg expire worthless.
The reason I like this strategy more than the one below, is that $10 - $15 is a nice BIG window. And, I like the risk reward ratio better. I don't like the fact that this trade goes all the way out to January ... because I'm convinced news will happen in the next 2 months. Maybe, if the volatilities drop, it would be best to take the trade off as soon as there is a decent profit.
OK ... those are my ideas ... anyone have anything better??
-Samantha
(//)
Hey samantha,
To be honest, I don't think you will find very many people here who are utilising options in their trades (or at least discussing them on 3sof - although I know that Leira trades mostly options - you could PM her). Mostly this sight generally tends to side with plain old stock trading.
So as far as options strategies, unfortunately I can be of no use. However I did say that I would have a lok at the charts for NFLD, so I'll giev you my perspective on them if you want.
The 1 year daily chart is [pretty interesting really, and you cna see that since April, NFLD has developed a pretty wide ascending channel, with sharp rallies and slightly more orderly pullbacks to support. The rallies have been real rippers, but surprising have not been combined with massively increased volume. The pullbacks have generally formed falling wedges which have consolidated and then broke to the upside. NFLD jsut broke out of one of those last week. Things to note: the CCI does a fairly good job of tagging those reversals and we just got one when it went back down to 12. There seems to be definite resistance at 13.50 which it will have to get through to continue its bullish charge. However, unless things go real bad and we get a channel breakdown, I don't see it going below $12 in the next month or two.
The 3 year weekly chart puts all this into context. We can see that there is significant resistance just over $15 which was the recent high in October. It will need a LOT of oomph to get through that, but if it does it is in real breakout territory. I am not sure how it will react when it gets to this level, but right now I am fairly confident that it should retest this level in the near future, now that it has pulled back and tested the channel. Also there is a trendline from the symmetrical trinagle breakdown in 2005 which looks valid as coninuing resistance on this weekly chat. The price broke through this level this week, but subsequently sold of and cclosed the week right on this level. I would think a failure at $13 may push it back down to channel support.
Personally, I like the chart, I like the channel formation (but we really don't know how long the channel will stay valid) and I think a buy as close to 12.50 as possible would be a pretty safe trade, with a stop just below $12. I would like it a whole lot better if it then went on one of its tears and took out $15 resistance. As far as options, I would think if you can get a good deal on those 12.50 calls, they would stand a pretty high chance of being in the money next month. I would maybe be a bit careful with the butterfly thingies (I really have no idea bout options...) as NFLD does have the cpapability to go on a tear, although I doubt it would produce a monster gap on you.
Anyway, hope this helps, I'll be keeping an eye on this one ;)
ST
Edit: Oops, I didn't realise that you had posted this on the options board - apologies!
ST - You are awesome! Thank you so much for looking this over as you promised!!!!!
As a new "regular" ... I still feel so much like a newbie... I'm absolutely thrilled when any of you Smart guys comment on my posts. Call me crazy ... or blond... hahahahahHAHAHAH It's a ton of pressure to be new!!!!!!!!!!!!
I hope I didn't confuse the issue by making the strategy suggestions below. My first post seemed like a problem finder and I want to be a problem solver. I wanted to make sure you had some idea of what I was thinking, so you would have something to work with and could look at the method behind my madness before you commented.
How was I to know ... that you've never seen a butterfly. ;) hahahHAHAHAHAHA
In short? Buy the wings and sell the body. I'm trying to capture/sell the volatility skew that I'm seeing in the near month.
What I would love to do is find a decent/free diagonal/calendar spread that would let me sell the current month and buy the Leap @ even. These options are so out of whack that I just can't make that happen.
You're right that if I could get a good deal on the $12.50 options I should get them - I totally agree. BUT ... compared to the future Jan09s ... they are so EXPENSIVE. Near term... I think anyone who buys the $12.50 options are wasting their money. I'd rather buy the stock. If you buy the 12.50 calls... your break even isn't until 15 ish and if you buy the puts, your break even isn't until 8.50 ish. No thank you!
OH ... and you should have seen me come absolutely unglued on Friday! Schwab posted a trade of like 1.2K options at the 2.5 Dec call strike. And I'm screaming - - "WHO THE HELL WOULD BUY THOSE??? .... IS THERE SOME RIDICULOUS STRATEGY I DON'T KNOW ABOUT?? IF THE STOCK GOES TO 2.5 I LOSE ALL MY MONEY AND IF IT GOES TO 13 I MAKE A PIDDLY AMOUNT THAT'S NOT WORTH MY RISK!!!!" ... then I went out to CBOE and the order must have been canceled or reversed. Thank GOD because Darwin was knockin' on that guy's door!
I think this is a good stock channel trade, but my focus was in the option skew, so I posted it in the options folder. I guess my hope was to have one of my Options ideas promoted from sub (option) idea ... to main (stock picking) idea. :) ... or ... dare I say ... 3sof pick!!!!
Very sad that you all are so focused on the stocks and not the options. :'( hahahahahHAHAHAHA
I just know there are more Options investors out there. We hide in the woodwork. If we can get some good ideas about direction going in that folder ... all you stock traders just might find some intersting picks... ;) It isn't a zero sum game. I think we can all win with a good pick.
So, if you think the low support should be around 12 and the high around 13.50 with serious resistance around $15, then maybe the stock traders will feel fine in that range and I feel better about BOTH of the strategies I've provided below. I'm still partial to the Long Iron Butterfly strategy. It has a bigger window of profit and more time to adjust the trade.
Keep an eye on me ... I know I'm dangerous!
-Samantha
Hahaha!!!! :D :D :D
You know I will ;)
FWIW it looks like when this thing runs, it picks up about $5 at a time, now this time might be different if the news is big, but if your options strategy can encompass a move to around $17 then you should probably be alright. I don't see NFLD breaking $15 without news.
However, I would be just a little bit careful with this one, simply because the expected announcement about the phase III results is expected "sometime in the fall" which means soon. And as we know, this is really the single most important announcement the company will make, as it determines their likelihood of their FDA submission, and the future of the company. So oviously when it hits the wires, this stock is gonna gap one way or the other, and it will probably gap bigtime. Upside gaps on major news for biotechs can often be 20-30% or higher. Downside gaps on bad news can be simply horrific, often over 50% or more. And because this company has nothing else to support it, it will very likely crash completely. So a news related gap could blow out both of your options strategies on this one. But I know you already know that...
The crazy options volatility suggests that a lot of people are hedging their bets on the outcome of this trial - if you can make sense of what the options volatility suggest, please, let me know!
Anyway, happy trading in whatever choice you decide to make! ::)
ST - You are the Master!
Wish one ... granted! ;D
Thank you for taking the time to help out ... NewbieRegulars!
SO ... Should I stop posting here and start posting on your thread instead? Thanks for all the blame ... nice! ;)
AND ... since you're one of the mucky mucks (and I use that in the most endearing way... because I love you all ;) ) Why are options and stock picking separated?
If you guys don't consider merging the two .. I may be forced to try and come up with better ideas in the Option folder ... ;) Then where would you all be ... lookin' to option traders for your ideas?? Dogs and cats ... sleeping together ... it just might be mayhem! Seems we can all benefit from a good "tell". Options ideas may turn out to be just as valid as lines, triangles, banners etc ...it would be a good back scratcher for both "teams"...
I'll look for bigger bodied butterflies to expand the gap... just picture a fat butterfly and you'll get the picture :)
And ... just so you know... I'm only high maintenance ... because I'm blond. And as soon as I come up with a good brunet joke ... I swear to god I'm posting it in the lounge!!!!!! hahahahahHAHAHAHAHA
Glad you're watching ;)
-Samantha
Applaud Samantha for your excellant options 101.
As this thread is entirely NFLD and also Options whether top merge it or not is a good question. Personally I'd like to keep it here in options for now so other people can read and enjoy the detail.
Keep up your options posts, people are interested to learn (me included ;)
Good Trading
Cool! So I made the Long Iron Butterfly a little wider...
Long Iron Butterfly:
And here is a wider Long Put Butterfly:
AussieTrader - I'm so thrilled you saw this string and commented!!!! It's nice to have all the smart people keeping me in line! The daunting task should not just be Melf Elf. LOVE HIM!!!
Though ... technically... Butterflies and such are covered in the Options 102 course.... ;)
OK - so when you start stretching the body of the butterfly strategies listed below... They do both get "safer" but the risk/reward is just not really as appealing. I liked this stock for the near money option volatility. As you get farther and farther away from that, you lose that edge.
That's why i keep thinking there has got to be a calendar or diagonal spread in here some where!!!!
BUT it could be "easy" money when you consider the up and downside breakevens and such.
If anyone has troubles interpreting the info and extrapolating the ramification, PLEASE LET ME KNOW!!! :)
Don't hold me to these last quotes ... I've tipped back a couple and it is WAY past my bed time... :)
-Samantha
Today NFLD had a lot of bullish momentum indicated by the white marubozu. This is a possible bollinger band squeeze play. You can see how they are spreading and moving in opposite directions. A good bullish entry would be if the stock made a new high tomorrow. The Dec. 12.5 calls would be the option I'd pick. I don't usually do front-month unless I'm day-trading or swing-trading. Bollinger squeezes are swing-trade plays, and last 3-5 days. Exit the position when the lower band curves up and the stock stops going up.
Leaira
Very cool Bollinger Squeeze play. I've never used the Bollinger Bands like that, but it makes sense. With the $12.50 options @ $3.50, and resistance looking like it's around 15 or 16...and really only playing if for a couple days ... during the holidays... I just might consider playing the stock instead.
I wish I could figure out a way to sell that IV in the front month with a calendar spread...
Thank you so much for your help.
-Samantha
yeah was watching it today, very nice action, but didn't pull the trigger (don't ask why ???) By the time I got round to seriously looking at it, it was banging at 14.50, and for now is too close to $15 resistance for me to feel safe about an entry right here. If it takes out that resistance, then I'm in! Was trying to get my head around some of the crazy options talk on the Yahoo MB, but I just don't get it yet. I think I will have to do some reading about options and options trading to get a better grasp. Any suggestions???
Hi ST!
Oh my ... I'm still trying to figure Options out. I have an excel workbook of calculated and linked sheets ... of all the strategy permutations that I've been able to figure out. It's now 500 pages long. I thought I lost it last night when the wind storm killed our power...3 TIMES. No ... I hadn't backed it up... because... I'm blonde!!!!
The website Optionmonster.com has lots of really helpful information and resources about options. You have to sign up, but it's free. Lots of good info and screens and simulators. It's a really cool site.
And Optionetics.com has some cool information as well (no that's not option Scientology... :) ) But for the $4K they want you to spend on their course ... you would have to wonder if they serve cool-aide during the 2 days. hahahahahahHAHAHA
To get to NFLD ... I went to Optionmonster ... clicked on Options ... tools ... analysis... Implied volatility ratio scan ... then in the Option Volume & Volatility Filters ... I chose Schaeffer's Volatility Index vs Historical Volatility Filter ... I changed the filter to Current IV above Historical ... so I could find stocks that are expensive now. In theory, they should be expensive because something is happening... or going to happen ... soon.
OH - And the Najarian brothers broadcast from CBOE.com twice a day with unusual volume. They've even talked about unusual volumes that have turned out to be insider trading ... um and not the good kind. But once it's public, it's fair game ... kind of like doing the crime without doing the time :) .
Leaira may have better info/resources. I have to admit, for NFLD ... Leaira's "KISS" theory seems really ... brilliant. Options can sometimes let you WAY over complicate the process.
At the very least, I like to check the options on stocks, so I can get a feel for where people are placing their future bets. AND ... you know how there's that phenomenon that round numbers tend to provide support and resistance? I think there's something to that ... but I also think that when there is a huge volume of options at a strike, that can really contribute to the explanation.
OK ... so I'm pulling out my candlestick & chart analysis books ...all 50 of them ... so I can read up. I keep drawing lines all over my stocks and wondering 1) Is that where everyone else would put that line? 2) Do I have too many lines?? 3) Have I drawn any recognizable pattern whatsoever??? 4) If I'm right... what does it all mean???? And then I print and hang it on my wall as impressionistic art. hahahHAHAHAHAHA
Samantha,
I learned most of what I know about options by just hanging out in the chat room at www.bettertrades.com. The site also has many free online courses where the instructors actually take the time to explain strategies to anyone who wants to learn. Oh, I'm also a blonde too! ;D
Happy Thanksgiving!
Leaira
ok NOW I'm in - broke $15 in style - I really didn't expect it, but it looks like it really wants it on this one!!! hope you got your calls!
I'm glad someone is making money on this. I had an order ready to go at $15.01 and then I went down stairs for a cup of coffee and it was at 15.75. I'm so sad ... why can't I pull the trigger???
-Samantha
I missed it too - but I picked up some at 15.20. I really thought it was going to fall over at 14.90! Oh well, there are times you dould be making tea and times you should be making MONEY!!!! Is pulling back some, so might be worth sticking a toe in.. i just got a bit more at 15.40 ;D
Boy this charting stuff really works! My daily upper resistance line is at $16.36 ... and that's where it hit and fell.
What do you do now??
-Samantha
Hey - after the close ... or when you get a chance, can you check out my other posts in the options folder. I think I might have found a couple others that may turn out to be just like this. I'd REALLY appreciate your masterful comment. :)
-Samantha
OK, but I haven't got any more money to spend!! I'm margined up to the hilt as it is (oh dear....)
As far as NFLD goes, you're absolutely right, it did tag the upper channel line, I really didn't expect it to do so so quickly! But if you ask me, it just made a break through major resistance at 15, and has some serious bull power. I'm hanging onto this one for now, as if the news is good (which this buying frenzy suggests it might be) then it could gap or break right out of the channel - who knows, but for now, I like this action ;D
SWEET! You have time to check them out. The options crystal ball isn't foretelling a move on them until January... :)
Quote from: SamanthaStephens on November 22, 2006, 12:24:15 PM
Boy this charting stuff really works! My daily upper resistance line is at $16.36 ... and that's where it hit and fell.
What do you do now??
-Samantha
How did you calculate that? Please explain.
Thanks!
Leaira
I didn't calculate it, I took it off of my daily chart upper resistance line . I started drawing my line from 4/20/06, with a touch on 7/11/06 ... 10/6, 10/9, 10/10 and a touch today.
:)
Check out the picture at the very bottom of this string. I'm not a chartist, so I gave it a shot. My current support is at $12.15 and resistance is at $16.36.
There might be other patterns in there. I'm just not sure about pattern charting yet ... I'll brush up this weekend. :)
-Samantha
i think you forgot to attatch the chart, unless I have to pull the string from here....
It's WAY at the bottom of the string ... like my first post at the bottom. If you can't see it, let me know and I'll repost.
oh RIGHT!! you mean at the TOP of the string (sorry got confused with the tops and bottoms). I think they are all good for NFLD, and look pretty similar to what I was thinking (posted in the NFLD stock picking thread). The only thing is that the channel on the weekly chart didn't break to the downside on that last test - not quit sure why yours looks like it did. Using a semi-log scale on the weekly chart should be appropriate, but normally I try both, just to see what "fits" better - somwtimes you see completely different things depending on what scale you use, which gives you an idea as to what scale "the market" is using when respecting trendlines. My best advice is to just start charting EVERYTHING look for tredlines/support/resistnace everywhere, and you start to get used to it and patterns pop out more easily.
Just an options related question - I was having a look at the SPWR Jan07 35 calls - they look pretty good value right now at 5.45 - only a 45c premium on yesterdays closing price (and better value than the Jan07 40 calls). My analysis suggests we sould see $42 very shortly, if not higher, and their revs should expand substantially over 2007. But i don't know what the implied volatility or delta statistics suggest. Can you give me any help there?
Oh and by the way, I haven't had time to look at your other posts in the options folder yet (it ain't thanksgiving here, but still pretty busy), but I will get to them as soon as I can. Have a happy thanksgiving and don't eat too much turkey :D :D
Do you have a catalyst for SPWR? You need it to move quickly and without a catalyst, I don't usually consider options. On the monthly chart, it looks like the chart has double bottomed ... but it's all time high is only $45. I think a better time to have bought options would have been when the stock surpassed the peak of the bottom at $34.25 to catch the recent run up. Not so sure I'd do it here ... It may be interesting as it gets closer to the highs? Nothing in the options is telling me big move soon.
On all the stocks I've mentioned, I don't always know what the catalyst is ... but I know there's something lurking out there.
Leaira may be a better resource...
-Samantha
Sorry - I posted and then deleted ... cause I thought I put it on the wrong thread. This still stands:
NFLD is hanging in there ... and on a really bad day in the market...on no news and the option IVs are still really high in Dec/Jan, etc. Keep an eye on this one. Something is coming ... good or bad... not sure when. Not very helpful ... am I??
-Samantha
Hmmm... I got absolutely killed today. Stopped out of 6 stocks including NFLD. Not sure if I want to re-enter yet despite it acting strong later in the day. I think I need soem time to lick my wounds. ouch today hurt :P
Buddy... :'(
I saw the dip at the open, so I checked the other thread and it said your stop was at 14.46 ... so I figured you were safe with the dip to 14.91. Did you cancel your stop and bail or did you raise it? I still think this is going to be choppy until we hear what the news is. I'm totally bummed now. This was a really bad day for everyone that wasn't short. I'm always astounded when the DOW is down 150 points ... and nobody cares that the NASDAQ is down 50 ... if the NASDAQ was at the same level as the Dow ... it would be the equivalent of being down like 250 points. That's a hard day to be long in anything...
-Samantha
Another rough opening for NFLD and it caught a downgrade to sell. I don't think this is the big news, but it should make it hard hold for a while...
-Samantha
I've updated the title to include Options, so everyone is clear that this is a post in the options folder.
-Samantha
If you are going to trade NFLD options or stock at this point in time I would suggest visiting the NFLD board at http://www1.investorvillage.com/smbd.asp?mb=1666&pt=m before your trading day starts .At this point in time with news expected soon major forces are trying to manipulate the price of the options and stock.The so called analyst that filed the downgrade the other day was actually filing his first report for a company that pimps the reports for hedge funds ...sorry if I violated any protocols but this is my first post here .....I like the charts that you and Scottish Trader post and look forward to seeing them updated ..... You should never drink and trade because you might spill your drink !
Thanks for the link. Someone sent that to us the other day ... but maybe I was having a blond moment and couldn't figure out how to navigate the site. hahahahaha
Is this the downgrade your talking about? Or is there another?
http://biz.yahoo.com/ap/061128/northfield_labs_mover.html?.v=1
I don't know what to make of the comments - seems that if the trial had failed ... we would have heard that the trial had been prematurely ended ... and I haven't heard anything like that ... yet? I'm not in the stock either way ... but I'm hopeful for the trial. It just seems really necessary.
Here are the pertinent reminders - for those tracking on the stock / options....
I found an earnings date on clearstation ... but nothing official - January 8, 2007
http://phx.corporate-ir.net/phoenix.zhtml?c=91374&p=irol-newsArticle&ID=936711&highlight=
Northfield Laboratories Presentation at the BMO Focus on Healthcare 2006 Conference to Be Webcast Live
EVANSTON, Ill.--(BUSINESS WIRE)--Nov. 29, 2006--Northfield Laboratories Inc. (Nasdaq: NFLD) announced today that Steven A. Gould, M.D., Chairman and Chief Executive Officer, will be presenting at the BMO Focus on Healthcare 2006 Conference on Wednesday, December 6, 2006, at 2:30 p.m. ET.
Interested investors may access the live webcast of the presentation at www.northfieldlabs.com. A replay of the presentation will be available for two weeks.
-Samantha
The NFLD board on http://www1.investorvillage.com/smbd.asp?mb=1666&pt=m is the best location for info on NFLD . The upcoming meeting that is being web cast ( BMO Focus on Healthcare 2006 ) that you linked to is an institutional investors broadcast which usually come with a slide show presentation by the CEO an sometimes a Q and A . The trial ended last summer and all we are waiting on are the top line results due before the end of this month .The options trading is huge in volume and volatility for Dec and Jan and the stock has a 7M short position .This short position is 25 % of the float .This is a link http://www1.investorvillage.com/smbd.asp?mb=1666&mn=21060&pt=msg&mid=930581 to post 210260 which has a pertinent post on NFLD options and tactics .well I am of to the open !
Interesting ... is there a downside option strategy post? Looks like they're suggesting a bull call spread where you buy the Jan 20s and sell the 25s ... so your risk is ~1 and your reward is 5?
-Samantha
OK ... NFLD fell out of bed in after hours trading when it was announced that 46 of their patients died compared to 35 on the "standard treatment".
They are saying it's preliminary ... not significant...but this just breaks my heart.
I've never been long or short the stock or the options ... because I could never get a good feel from the buying of either to determine the direction of the stock. I've only said that there will be A direction ... soon. If you're not a dreamer ... read no further ... hit the back button now!!!
Maybe because I'm blond and overly optimistic/hopeful for our world ... BUT we really need this kind of treatment... now here I go Samanthasizing/monologuing... Think of all the possibilities. What if you had (in addition to the sheer number of traumas we have... just in the US) ... Aids or hepatitis etc...? If you could go in and have them replace your blood rapidly ... wouldn't that give your body the fighting chance to recognize the infection and attack it? The reason I suck SO BAD at trading stocks is because I get too wrapped up in the story/dream ... and perhaps not the reality. And I can't make g*d dam* heads or tails of what these options are trying to tell me ... tell all of us!!
3SOF - Please help!! Is this a buy now or is the company going down? Please help. :'(
-Samantha
HI Samantha,
Haven't been around much but I couldn't resist chiming in.... I almost made my first options purchase yesterday (but chickened out at the last minute... why???) When NFLD cratered I looked to short it, but couldn't so was looking to buy the Jan07 12.5 puts. They were trading around 4.00, which seemed expensive, but the market signal was so clear yesterday - NFLD is going DOWN!!! Now they would be worth a fair penny more I think!! (Oh well???)
But as we discussed earlier, there was a strong chance, which ever way NFLD went of it moving way beyond the range of the options spread you were thinking about. To me, NFLD looks like it will be a hot potato today. Heavy volume, possible heavy swings. It could rally hard at the open, possibly as much as a couple bucks, and then fall off, or it could also crash another dollar or more before a gradual recovery later in the day. Have a look at Calvens Exhausted Selling Model, for the kind of idea that I'm talking about.
http://www.3stocksonfire.org/trading/index.php?topic=3555.0 (http://www.3stocksonfire.org/trading/index.php?topic=3555.0)
It is rallying some in the PM right now, which suggests it could have a short term upside surge first thing, but I would be VERY careful as it will be highly volatile, and if you trade it, set an immediate stop at your max pain level (if it is rallying hard, my stop would be at my buy point, once it is cleared by 5-10%). Hope that helps. ST
Scottie... ;)
I have to tell you that I really appreciate you on SO many levels.
First - You are one of the few who just might not think I'm losing my mind. I was reading back on the thread and I had a good chuckle at our discussion of just how far this stock could move. You had the sensible take ... I took the blond dreamer sailing tack ... and I have to tell you ... The blond risk analysis/best or worst case scenario - -won. I think you owe me a virtual bottle of wine on that one. ;)
Second - I've learned so much from you ... in such a short amount of time. When I don't see you on line, I hope constantly that my goofy ideas haven't put you out of the game. I always read your personal log to get great ideas. And, I know you were playing this one, and when I saw the devastation (after I got home from my new 9-5) I only thought of you and hoped that you were OK if you were in it. I think you're awesome ... in fact...you should probably keep that virtual bottle of wine.
I know this probably isn't the best forum for stock options. But it's the best site I've ever seen. And you have to admit ... that when these skewed option stocks move ... the stocks really are on fire. The brilliant minds on this alias do an incredible job of charting to predict the future. BUT ... these skewed option stocks defy charting reason. AND even if options are not the primary source of great ideas ... I really think they need to be considered if only to avoid any wildly unexpected move.
Luv you!
Be/Trade safe....
-Sam