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Before we can begin to trade in options, we need to understand the basic terminology of these sophisticated financial instruments so that we can star

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

t to interpret the mass of figures which appear, when an option chain appears on the screen.

Each option has a so called strike price. This is the p

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

ice at which the option contract has been written. Every option has a whole series of strike prices from which you choose the one you feel is the mos

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

t appropriate. Most options are written on a monthly basis, so at any one time there will be a series of options spread over several months into the

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

uture. Every option is issued with a spread of strike prices from very low to very high. The increment of the strike will vary according to the under

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

ying value of the share. For a low value stock, the increments might be in $1 amounts, but for a higher value stock these could be $5 or $10 steps.

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

The series of options is called an option chain, and each chain will cover several months. Some series are written quarterly and others on a monthly

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

asis.

The strike price is normally presented in the middle column, with calls to the left hand side and puts shown on the right hand side. The first

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

column labeled ‘symbol’ shows the unique code for that particular option. These are unique to the contract, the period and the equity, and can be fou

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

nd on many sites. When trading they normally appear as part of the trade – it is not something you have to remember! The next column is the ‘last’ ,

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

hich displays the most recent prices which have been bid.

The bid and ask prices are simply the buying and selling prices of the premiums, with the

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

vol’ column showing the number of trades for that particular day. The final column is normally one labelled OI, which is short for ‘Open Interest’. T

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

his shows the number of contracts bought or sold and currently waiting for the expiry date.

An option is said to be 'in the money' if the strike pri

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

e is below the market price for a call, and above the market price for a put. For example with a call if the strike price for the option was 500p and

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

the equity was trading in the market at 550p, then this would be 50p in the money. (Remember a call increases in value as the underlying asset increa

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

ses in price). With a put, this would be in the money for the same strike price if the equity was trading at 450p. These are normally highlighted in

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

he chain to show their status. An option is 'at the money' if the strike price and market price are the same.

‘Out of the money’, is simply the reve

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

se of being in the money. For example with a call, if the strike price was 500p and the equity was trading in the market at 450p, then this would be

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

50p out of the money. An option has intrinsic value if it is in the money and an at the money, or out of the money option, therefore has no intrinsi

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

value.

Each chain will show the underlying equities current market value, along with the associated ticker and the number of days left until expiry

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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