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Top Articles - Options Education: Financing the Calendar!
As a trader, one of the key things that I try to consciously do is to cultivate my instincts by talking with other traders and investors as often as possible. It still amazes me how large the divergence of opinion that exists regarding what people believe will unfold as we enter the new millennium. Many very respected names are literally predicting an economic earthquake
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
that will measure a 10 on the Richter scale while others having looked at the exact same research claim that the consequences will be very mild. As a trader I have to evaluate the data and develop a strategy that I feel not only gives me an edge but allows for a great deal of error while still being low risk!
In his book, "Business Without Economists" author William J.
In his book, "Business Without Economists" author William J.
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
Hudson submits a theory worthy of every traders consideration. (Particularly now with Y2K just around the corner) He states:
1) The demand for answers will always be greater than the supply.
2) Therefore, the price for answers will be high.
3) Therefore, a very large supply of answers will emerge.
4) Therefore, most answers will be false, especially when tested again
1) The demand for answers will always be greater than the supply.
2) Therefore, the price for answers will be high.
3) Therefore, a very large supply of answers will emerge.
4) Therefore, most answers will be false, especially when tested again
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
st reality.
I have this STATEMENT posted on my computer as a reminder to myself that markets are very humbling mechanisms. The key question that we as traders must continuously ask ourselves with regards to whatever trading strategy we enter into is, "What if I am right? And What if I am Wrong?"
As I assess the economic landscape and scan the marketplace for trading op
I have this STATEMENT posted on my computer as a reminder to myself that markets are very humbling mechanisms. The key question that we as traders must continuously ask ourselves with regards to whatever trading strategy we enter into is, "What if I am right? And What if I am Wrong?"
As I assess the economic landscape and scan the marketplace for trading op
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
portunities there is one fact that I must pay attention to: The NAME of the GAME is Managing RISK!
With this in mind, let's evaluate some of the important facts:
Many of the Commodity Markets have bounced sharply from their twenty to thirty year lows.
When I cross reference this FACT with the REALITY that INFLATION is back in the economy, it creates some very interest
With this in mind, let's evaluate some of the important facts:
Many of the Commodity Markets have bounced sharply from their twenty to thirty year lows.
When I cross reference this FACT with the REALITY that INFLATION is back in the economy, it creates some very interest
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
ing trading opportunities for the OPTION savvy trader. The key to any trading strategy in my opinion is that it HAS to be low risk because there are so many possible outcomes that may occur.
The purpose of this strategy is to eliminate the need for timing the market by developing a method minimizing my exposure to loss. Before I provide you with the mechanics of this ta
The purpose of this strategy is to eliminate the need for timing the market by developing a method minimizing my exposure to loss. Before I provide you with the mechanics of this ta
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
ctic let me illustrate an outlandish possibility so that we can get clear on a traders definition of RISK. Let's say that you are convinced that on March 1, 2005 that you think that Gold is going to be trading at $3,000 dollars an ounce. (I did say outlandish!) Based upon this scenario even if you wholeheartedly disagree, how could you trade this viewpoint and still tak
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
e very little risk? Most people think that RISK is defined as BEING RIGHT or WRONG on the outcome of a trade. However, a risk sensitive trader is only concerned with their exposure to chance of LOSS.
If you thought that Gold was going to be trading $3,000 an ounce you could enter into the marketplace and very inexpensively purchase a couple of Call Options that would
If you thought that Gold was going to be trading $3,000 an ounce you could enter into the marketplace and very inexpensively purchase a couple of Call Options that would
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
give you the right to purchase Gold at $500 an ounce. In this instance, the most that you could lose is the money that you put up to purchase the options and you would have the RIGHT but not the obligation to purchase Gold at $500 between now and March. However, just because you have LIMITED RISK you STILL have a great deal of EXPOSURE to LOSS. Reason being, that if GO
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
LD does not get up to $500 you would lose all of the money that you put up to purchase the options.
The way that a professional would trade this scenario is that he would finance the trade through OPTION SELLING. When you SELL an OPTION you are in effect creating an OBLIGATION that you are forced to abide by contractually. For example if you SELL a $500 December Gold Ca
The way that a professional would trade this scenario is that he would finance the trade through OPTION SELLING. When you SELL an OPTION you are in effect creating an OBLIGATION that you are forced to abide by contractually. For example if you SELL a $500 December Gold Ca
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
l and receive money you have in effect agreed to deliver Gold to the option purchaser at a price of $500 between now and December 2004.
As a seller of this option, the most that you can make is the premium that you collected and your upside RISK is theoretically unlimited. If Gold is trading at $800 an ounce come December 2004 and you have not offset this option you are
As a seller of this option, the most that you can make is the premium that you collected and your upside RISK is theoretically unlimited. If Gold is trading at $800 an ounce come December 2004 and you have not offset this option you are
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
obligated to make delivery of Gold to the Option purchaser at the originally agreed upon price of $500 an ounce. Should this occur you would in effect have a loss of $300 per ounce on each contract that you sold. Not very attractive, especially since each Gold contract is 100 ounces in size. The loss becomes $30,000 per contract. That is a lot of risk!
The way to mi
The way to mi
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
nimize RISK is to SPREAD it off against other OPPOSITE Options positions.
In the above example, let's say that a trader purchased 1 March $500 Gold call Option for a premium payment of $6.00 an ounce ($600). Each Gold contract is 100 ounces so this trader would be paying $600 per option . The RISK here is very clearly defined as $600. However, if this same trader now
In the above example, let's say that a trader purchased 1 March $500 Gold call Option for a premium payment of $6.00 an ounce ($600). Each Gold contract is 100 ounces so this trader would be paying $600 per option . The RISK here is very clearly defined as $600. However, if this same trader now
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
SOLD (1) GOLD December $500 Gold Call Option (NOTE THAT THE DECEMBER OPTION WILL EXPIRE BEFORE the March Option) and collected a premium payment of $300 they have in effect reduced their initial risk to the difference between the $600 that they paid out and the $300 that they collected, or $300.
Let me outline what this trader has done. They have obligated themselves to m
Let me outline what this trader has done. They have obligated themselves to m
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
ake delivery of 100 ounces of Gold at a price of $500 an ounce between now and December and simultaneously they have the right but not the obligation to own 100 ounces of Gold at $500 an ounce between now and March. They have established a BULLISH CALENDAR position by SELLING a Call option in a nearby month and using the money that they collected in the sale of that op
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
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
tion to finance their purchases of the Call Option in the deferred option expiration month.
What this strategy is in effect saying is that it is the traders opinion that Gold will make its move after December but before March. Although it does not appear very exciting now, should this anticipated disruption occur in that time frame a trader that positioned themselves in
What this strategy is in effect saying is that it is the traders opinion that Gold will make its move after December but before March. Although it does not appear very exciting now, should this anticipated disruption occur in that time frame a trader that positioned themselves in
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
this style would be sitting in the drivers seat. Essentially they would be looking at a maximum risk exposure of $300 with the possibility of unlimited upside potential. (YES, I realize that with Gold at $430 at present time that possibility appears extremely remote.) However, it is this kind of trading tactic that makes a great deal of sense in markets that are tradi
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
ng at historical lows.
The key to successful trading is to minimize your risk as you acquire more information. The closer you get to option expiration the more information you will have regarding the feasibility of this tactic. The key however is that you played the game without exposing yourself to a great deal of DOWNSIDE. That my friends is the path to long term suc
The key to successful trading is to minimize your risk as you acquire more information. The closer you get to option expiration the more information you will have regarding the feasibility of this tactic. The key however is that you played the game without exposing yourself to a great deal of DOWNSIDE. That my friends is the path to long term suc
.
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
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
cess in any highly leveraged transaction. As William J. Hudson stated,
"Most answers will be false, especially when tested against reality!" Worth thinking about.
Just one more way to swing for the fences without taking a great deal of risk.
STUDY AWAY and let's be careful out there!
Dowjonesfully-
-Harald Anderson
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Just one more way to swing for the fences without taking a great deal of risk.
STUDY AWAY and let's be careful out there!
Dowjonesfully-
-Harald Anderson
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
er.com">http://www.eOptionsTrader.com.
THE RISK OF TRADING IS SUBSTANTIAL, THEREFORE ONLY "RISK" FUNDS SHOULD BE USED. The valuation of such may fluctuate, and as a result, clients may lose their original investment. In no event should the content of this website be construed as an express or an implied promise, guarantee or implication by anyone that you will profit
THE RISK OF TRADING IS SUBSTANTIAL, THEREFORE ONLY "RISK" FUNDS SHOULD BE USED. The valuation of such may fluctuate, and as a result, clients may lose their original investment. In no event should the content of this website be construed as an express or an implied promise, guarantee or implication by anyone that you will profit
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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