I expected NVAX’s antibody and immunity results in baboons would translate to humans and predicted the share price would go to $200 from $130. K thought I was delusional. Prodded to make some mental calculations of potential profit led me to the final analysis that buying options for NVAX would be 3.5 more times more profitable than buying stock. Seeing dollar signs, i called the brokerage account and asked a few stupid greedy questions. "how do i enable margin trading?" "just apply online" “If my stock exceeds my strike price by the cost of the premium, how do I exit a call contract?” “You sell to close” “you sell it by the close of the market?” Flabbergasted by my confusion she said, “No. Sir, before you do options trading, we highly recommend you take our online options course.”
NVAX's results were expected at the end of July. I needed to learn options fast if I wanted to take advantage of them. Each day I spent hours reviewing the online courses. Theoretically, options are simple. Options are bought and sold in 100 share lots. They allow traders to buy and sell stock at certain strike prices within certain time frames. Easy. Like former redsox pitcher Joe Kelly striking out correa and saying 'this shit's easy at the 1:59 mark.' A long term buyer in stocks predicts which stock will go up and buys them. A trader in options predicts how a stock behaves much like sports bettors bet how a game will unfold. However, because of my general financial retardation, it took me a long time to absorb this new information. If you're not retarded like me, skip the next 4 paragraphs. For all the other artistic and unemployed cultural types, read on.
Buying calls. Say you think a stock price is going to go higher. You can either buy the stock, or you can pay a small premium to get the right to buy the stock at a certain strike price. That’s called buying a ‘call’. For example, stock ABC is priced at $100, but you think it will increase to at least $120 by the end of the month. you pay a premium of $5 for the option to buy ABC if the stock hits the strike price of $120. If the stock never hits $120, you lose $5. If ABC runs up to $200, you collect $80 profit minus the $5 premium. For the previous example, in a successful trade, buying an option for $500 to control 100 shares of ABC costs much less than buying 100 shares of ABC for $10,000. That is, you can make $8,000 in profit by spending $500 to buy options versus making $10,000 in gains by spending $10,000 to buy stock. The danger is if the ABC stock never rises above $120, you lose $500.
Selling calls. Conversely, say you think the stock price won’t go that high, you can sell the right to buy a stock at a strike price, that is called ‘selling a call’. Stock ABC is priced at $100. You charge $5 to someone who buys your option for the right to buy your stock if it hits $120. If the stock never goes to $120 you pocket the $5 premium. If the stock goes to $200, you’re obligated to sell your stock to the option buyer at $120 so you make $20 plus the premium but lose out on the extra $80 gain.
Buying puts. Say you think the stock is going to tank, you can buy the right to sell the stock at a certain price. That is called buying a put. You own stock ABC and it’s trading at $100. For $5 you buy the option to sell the stock at $90. If the stock drops to $20, you only lose $10 plus the cost of the put from the stock because you have the right to sell at $90.
Selling puts. Alternatively, you can sell an option to sell a stock at a certain price, that’s called selling a put. Say stock ABC is trading for $100. You collect $5 in exchange for giving the buyer the right to sell the stock to you at $90. If the stock declines below $90, at the time of the put expiration, you have to buy the shares at $90. In plain English, buying a put is like buying insurance... you pay a premium so if the stock goes down in flames you have the right to sell it at a certain price Selling a put is like selling insurance. It means you have an obligation to buy the stock at a predetermined price from the option buyer if they exercise the option.
Once comfortable with buying and selling puts and calls, one can then proceed to execute simultaneous call and put options on the same stock to invoke a variety of different strategies with exotic sex position names like short straddles, long straddles, collars, iron butterflies, iron condors, etc... At this point in the online course, my brain retired from further learning and I decided to start trading options. I learn better in hands-on situations anyways.
On Monday, July 20th, i made my first purchase for 5 calls for July 31st. K told me it was risky to buy calls for the week of the data announcement because biotech companies regularly postpone announcements. I told her, don’t worry, the CEO of the company assured his audience at a virology conference that data would be provided last week of July. On July 24th, I then proceeded to buy 50 more call contracts for August 7th.
After the flurry of my activity and the market close on July 24th, NVAX came out with a press report saying they would postpone reporting clinical data till first week of August and that they had engaged with Fuji films to manufacture raw materials for the vaccine, and president Trump would be making a tour of the facility on Monday, July 27th. Companies bury bad news by coupling it with positive announcements. Fuckers.
The following day on July 25th, I received my first margin call. I had used other stocks in my account as collateral to get a loan to purchase options... as the value of my stocks dived, I got a series of alarming messages threatening liquidation of positions to cover my margin. People buying NVAX expecting news the following week were exiting their positions, sending the share price down precipitously. I had developed a trading strategy assuming data would be published at the end of July, and now had to adjust to the change in schedule.
To avert disaster I transferred my kids’ stocks into my account as additional collateral. I was experiencing first hand what it was like to engage in a Ponzi scheme. By covering losses with new lines of collateral I was able to avoid selling stock. Online courses don’t teach you how to do this. Within the first week, I learned several other hard lessons about the intricacies and hazards of options trading. If a biotech company promises results by a certain date, save yourself sleepless nights and a heart attack and buy call contracts which expire a couple weeks after the expected readout in case the data is delayed. Second, if buying biotech stocks is like riding a roller coaster, buying biotech options is completely volatile like lighting a cigarette in a dry forest with leaking barrels of gasoline. A small change in stock price leads to a large percentage change in the option's price. Third, don’t max out your margin capabilities because the volatility of stocks will potentially invoke margin calls. Fourth, if you click on the ask price in an options chain, it overrides initial instructions to buy a call and tells the online brokerage to sell a call instead (I spent a couple phone conversations with technical support of the brokerage house complaining about the graphic design of their website and their confusing user interface).
In my second week of options trading, I walked a tightrope of risk. Any further losses and I faced the danger of falling into liquidating margin calls. By Monday July 27th, my July 31st calls were half worthless. I normally couldn’t care less for Trump, but all of a sudden I was rooting for him to make sensational lies like “NVAX will cure corona... just like taking Hydroxychloroquine or drinking bleach. Or the government will give accelerated approval for NVAX and pump in another billion dollars of funding.” I made a pact with the devil and pledged my vote for the fat orange haired fuck if he got me out of my options mess.
Trump didn't say anything sensational, but he didn't hurt the stock either. Over the next week, the stock traded up and down... confused as if traders were trying to process the company's valuation given a presidential visit, a Fuji film alliance, and data delays. when the market dipped I bought cheap August 21st calls and sold out of half my August 7th calls when the market rose. I was riding the roller coaster of NVAX stock fluctuations trying to derisk my situation, fearing another delay in data announcement would lead to my complete and devastating financial ruin.
I like buying biotech stock like I like riding roller coasters but not when my money is flying into space. I like buying biotech options as much as i like fire in the winter but not when I burn my house down. During this period of fear and uncertainty I kept joking to myself, hopefully none of the baboons in NVAX's clinical trials come down with a cough and die... otherwise my stock options would expire worthless and I would soon be looking to the streets for a place to sleep.
NVAX's results were expected at the end of July. I needed to learn options fast if I wanted to take advantage of them. Each day I spent hours reviewing the online courses. Theoretically, options are simple. Options are bought and sold in 100 share lots. They allow traders to buy and sell stock at certain strike prices within certain time frames. Easy. Like former redsox pitcher Joe Kelly striking out correa and saying 'this shit's easy at the 1:59 mark.' A long term buyer in stocks predicts which stock will go up and buys them. A trader in options predicts how a stock behaves much like sports bettors bet how a game will unfold. However, because of my general financial retardation, it took me a long time to absorb this new information. If you're not retarded like me, skip the next 4 paragraphs. For all the other artistic and unemployed cultural types, read on.
Buying calls. Say you think a stock price is going to go higher. You can either buy the stock, or you can pay a small premium to get the right to buy the stock at a certain strike price. That’s called buying a ‘call’. For example, stock ABC is priced at $100, but you think it will increase to at least $120 by the end of the month. you pay a premium of $5 for the option to buy ABC if the stock hits the strike price of $120. If the stock never hits $120, you lose $5. If ABC runs up to $200, you collect $80 profit minus the $5 premium. For the previous example, in a successful trade, buying an option for $500 to control 100 shares of ABC costs much less than buying 100 shares of ABC for $10,000. That is, you can make $8,000 in profit by spending $500 to buy options versus making $10,000 in gains by spending $10,000 to buy stock. The danger is if the ABC stock never rises above $120, you lose $500.
Selling calls. Conversely, say you think the stock price won’t go that high, you can sell the right to buy a stock at a strike price, that is called ‘selling a call’. Stock ABC is priced at $100. You charge $5 to someone who buys your option for the right to buy your stock if it hits $120. If the stock never goes to $120 you pocket the $5 premium. If the stock goes to $200, you’re obligated to sell your stock to the option buyer at $120 so you make $20 plus the premium but lose out on the extra $80 gain.
Buying puts. Say you think the stock is going to tank, you can buy the right to sell the stock at a certain price. That is called buying a put. You own stock ABC and it’s trading at $100. For $5 you buy the option to sell the stock at $90. If the stock drops to $20, you only lose $10 plus the cost of the put from the stock because you have the right to sell at $90.
Selling puts. Alternatively, you can sell an option to sell a stock at a certain price, that’s called selling a put. Say stock ABC is trading for $100. You collect $5 in exchange for giving the buyer the right to sell the stock to you at $90. If the stock declines below $90, at the time of the put expiration, you have to buy the shares at $90. In plain English, buying a put is like buying insurance... you pay a premium so if the stock goes down in flames you have the right to sell it at a certain price Selling a put is like selling insurance. It means you have an obligation to buy the stock at a predetermined price from the option buyer if they exercise the option.
Once comfortable with buying and selling puts and calls, one can then proceed to execute simultaneous call and put options on the same stock to invoke a variety of different strategies with exotic sex position names like short straddles, long straddles, collars, iron butterflies, iron condors, etc... At this point in the online course, my brain retired from further learning and I decided to start trading options. I learn better in hands-on situations anyways.
On Monday, July 20th, i made my first purchase for 5 calls for July 31st. K told me it was risky to buy calls for the week of the data announcement because biotech companies regularly postpone announcements. I told her, don’t worry, the CEO of the company assured his audience at a virology conference that data would be provided last week of July. On July 24th, I then proceeded to buy 50 more call contracts for August 7th.
 |
| typical options chain |
The following day on July 25th, I received my first margin call. I had used other stocks in my account as collateral to get a loan to purchase options... as the value of my stocks dived, I got a series of alarming messages threatening liquidation of positions to cover my margin. People buying NVAX expecting news the following week were exiting their positions, sending the share price down precipitously. I had developed a trading strategy assuming data would be published at the end of July, and now had to adjust to the change in schedule.
 |
| a typical margin call warning |
To avert disaster I transferred my kids’ stocks into my account as additional collateral. I was experiencing first hand what it was like to engage in a Ponzi scheme. By covering losses with new lines of collateral I was able to avoid selling stock. Online courses don’t teach you how to do this. Within the first week, I learned several other hard lessons about the intricacies and hazards of options trading. If a biotech company promises results by a certain date, save yourself sleepless nights and a heart attack and buy call contracts which expire a couple weeks after the expected readout in case the data is delayed. Second, if buying biotech stocks is like riding a roller coaster, buying biotech options is completely volatile like lighting a cigarette in a dry forest with leaking barrels of gasoline. A small change in stock price leads to a large percentage change in the option's price. Third, don’t max out your margin capabilities because the volatility of stocks will potentially invoke margin calls. Fourth, if you click on the ask price in an options chain, it overrides initial instructions to buy a call and tells the online brokerage to sell a call instead (I spent a couple phone conversations with technical support of the brokerage house complaining about the graphic design of their website and their confusing user interface).
In my second week of options trading, I walked a tightrope of risk. Any further losses and I faced the danger of falling into liquidating margin calls. By Monday July 27th, my July 31st calls were half worthless. I normally couldn’t care less for Trump, but all of a sudden I was rooting for him to make sensational lies like “NVAX will cure corona... just like taking Hydroxychloroquine or drinking bleach. Or the government will give accelerated approval for NVAX and pump in another billion dollars of funding.” I made a pact with the devil and pledged my vote for the fat orange haired fuck if he got me out of my options mess.
Trump didn't say anything sensational, but he didn't hurt the stock either. Over the next week, the stock traded up and down... confused as if traders were trying to process the company's valuation given a presidential visit, a Fuji film alliance, and data delays. when the market dipped I bought cheap August 21st calls and sold out of half my August 7th calls when the market rose. I was riding the roller coaster of NVAX stock fluctuations trying to derisk my situation, fearing another delay in data announcement would lead to my complete and devastating financial ruin.
 |
| trump at Fuji facilities |
I like buying biotech stock like I like riding roller coasters but not when my money is flying into space. I like buying biotech options as much as i like fire in the winter but not when I burn my house down. During this period of fear and uncertainty I kept joking to myself, hopefully none of the baboons in NVAX's clinical trials come down with a cough and die... otherwise my stock options would expire worthless and I would soon be looking to the streets for a place to sleep.
 |
| novavax roller coaster |
After the markets closed today, NVAX finally released their data. Fake news about 8 hospitalizations during clinical trials sent the stock plummeting down to $111 from $157. I was carefully scouting out various cardboard boxes to sleep in my neighborhood and about to eat crow for dinner. Once the misreporting was cleared up, however, and the antibody titers were presented (showing much more robust numbers for neutralizing antibodies and T-cell responses than any competitors like AZN, PFE, MRNA), the stock started taking off after hours with analysts praising the future of the stock.
 |
| NVAX antibody titers compared to convalescent serum |
I was just happy to survive to ride the rollercoaster another day.
No comments:
Post a Comment