Thank You, Santa

It may be just a fleeting good feeling, but two trades I wanted to get done last week went off easily on Thursday and again this morning, simply by leaving “good ’til canceled” orders.

One was the sale of covered calls on my Christmas special biotech, Synta Pharmaceuticals.  I should point out that a kind reader showed me a very negative article on this stock, but I’ll just be happy for the time being that I’ve hedged by selling calls for a fat premium.

The other went off this AM before I got to my computer.  I finally did buy those additional shares in ANH for a price under $7, commissions included.

As any kid knows who has stayed up to catch the Big Guy in the act, it’s not until you’re not looking that the magic of the season can work.  I think maybe it’s that way with GTC orders, too.  After several days of trying to get filled in thin volume, it’s as if I was a kid who went back to bed convinced the whole Santa thing was a scam.  Then in the morning, the loot was there.

A cyber-friend from a decade ago was the biggest advocate of this strategy that I know.  His mega-bear call on stocks (especially high tech) convinced him to convert much of the filthy lucre he got from hi-tech stock option compensation into very low priced, very long dated, very out-of-the-money puts.

His mantra was:  “let the price determine your timing, and let the market come to you.”

He did succeed in leaving his sinecure in Silicon Valley and multiplying his net worth on his lottery-ticket put options.

Just a quick note, starting the New Year by getting the last of my year-end shopping done.

For those who are trying the biotech covered call strategy, here’s an article that utterly slams SNTA.  I hope they’re wrong, but it won’t be the end of my world if they are right.  The same should be true for you — don’t risk money you can’t afford to lose on these speculative drug developers.

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3 Responses to Thank You, Santa

  1. Patrick says:

    **Synta Pharmaceuticals Announces Proposed Public Offering of Common Stock**

    Overnight offering of 4.6 million shares (if overallotments are fully exercised). Should price around $5.25/share.

  2. Patrick says:

    Synta Pharmaceuticals Corp. announced the pricing of an underwritten public offering of 5,555,556 shares of its common stock at a price to the public of $4.50 per share for gross proceeds of approximately $25 million. Synta has also granted the underwriters a thirty-day option to purchase up to an additional 833,333 shares to cover over-allotments, if any, which would result in additional net proceeds of approximately $3.5 million if exercised in full.

    • hhill51 says:

      Thanks for staying on top of this, Patrick. I took the opportunity to buy some more. Once again, I did not see big enough premia to sell the call options right away. Still, with the kind of volatility this thing shows, I’m sure I’ll get my chance.
      -hh

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