Another seeking alpha pump (ATRS)

Just a small trade this one. Took a small position short ($4.88 yesterday) and covered this morning $4.50's.


Stock up on seeking alpha articles. Was late to the trade and could not day trade it so the position was small.

Open Trades 
Short

CIGX, SUPN

Puts

CIGX ($3.50 Aug), SNTA ($5 July)

Long
UNIS, ACAD, AMRN

2012 Returns

July, -0.5%
June, -3.4%

May, 10.4%
April (blog inception),  -1.8%

Classic bio rundown (ARNA)

Best trade of the month (June) was ARNA, a classic sell the news positive PDUFA trade. The stock spiked as high as $13 post the announcement (midday). We missed the dramatic gap up to $13 when the shares resumed trading, and went short side prior to conference call (past experience shows this is an excellent time to short), this gave us an excellent price $11.80 with low risk because the stock had settled. We also bought $12 puts for $1.33 at this time.

The rundown then begun in earnest. Other than getting some of our short entry away on the big spike (this obviously involved much more risk), most of the errors on this trade were profit taking.

As per PLX rundown, I prefer to take the option profits first when volatility is high - there was good opportunity here to take the puts off at $1.90's when the stock cratered to $11.00. Instead I took some of the short position off before close (at $11.40!) scared that we would see a gap up. I should have averaged out more slowly (in quarters), with expectation of holding the remaining shares for a few days at least.

Open Trades 

Short

CIGX, SUPN

Puts

CIGX ($3.50 Aug), SNTA ($5 July)

Long
UNIS, ACAD, AMRN

2012 Returns

July, -0.5%
June, -3.4%

May, 10.4%

April (blog inception),  -1.8%

Bio rundown (OSUR)

A mixed short here. PDUFA rundown play. Timed entry well, with good position size. Decided not cover on intra-day dip, stock rebounded and was volatile, it was a 50/50 call on whether I should hold overnight, given how well it held up. The big mistake was, buying puts at 40c, I bought these on the bounce back to 13.50 (12.50 puts expiring two weeks). 2hrs later the option price collapsed to 20c. I felt stupid for overpaying. I also probably should have not been buying options for this rundown, it was always meant to be more of a scalp of a rundown, it wasn't a perfect rundown setup.

The next morning the price collapsed to as low as 12.80, no options traded, at best I perhaps could have got them away for 30c. This showing just how bad my trade was yesterday. I covered 13.10. 


Stuck with the puts for a couple of days I was considering taking 20c for the loss. Fortunately on Monday they announced a capital raising. I covered most of the position yesterday when the stock faded below $12.50. I left some just in-case the raise price was in the $11's. It ended up pricing at 12.30. I rushed the options trade at the morning and got 25c, I could have got 40-45c - showing my option inexperience again! 

Open Trades 

Short

CIGX, SUPN

Puts

CIGX ($3.50 Aug), SNTA ($5 July)

Long
UNIS, ACAD, AMRN

2012 Returns

July, -0.5%
June, -3.4%

May, 10.4%
April (blog inception),  -1.8%

Squeezes (SYNC, ARNA & HZNP)

I have made a number of small shorts on overextended positions. My timing has generally been poor.


These positions are small because I am giving them a very large stop loss. This is another way of playing extremely overvalued stocks.


ARNA - I rushed my first trade at $10.8, the stock was overextended but was grinding higher, it had not gone parabolic, the next morning it spiked and I added to the position. This was an excellent entry ($11.80). The stock fell to the low $11 late last week. However this week it broke to new highs and I sold at $11.80. This stock will be in play next week with the VVUS PDUFA decision.

SYNC - there is a strong fundamental case for a short here, summed up in the below tweet. However a strong fundamental case means jack for promoted stocks particularly if they are being promoted my NIA. These are the guys who took BVSN from $8 to over $50. This one is a little different, it is not as low float, does not have a Facebook IPO as a driver & the street follows it (every analyst has downgraded it on valuation concerns). However, there is no reason they cannot take it to $20+. I dived in with too big of a position (av price $15.50), but fortunately got a pull back yesterday (covers at $14). The easy money was on the long side when it comes to NIA pumps, that should have been my bias on Friday.

HZNP - This was a good trade, the stock is wildly overvalued and will be an all time rundown candidate if it is approved. I didn't get the pull back I expected, I took profits on Friday ($8.40 to $8.00). Should have been more patient...

Key lesson on these trades is too wait for extreme parabolic action and size in accordingly. Another argument is, I should only be taking these types of trades using options or on hard to borrow stock. HZNP and ARNA should be treated as short squeeze trades (bigger size and closer stop). Perhaps I could use a combination of both, go in for a full position short squeeze trade but if stopped out don't take it all off (assuming I have day trades available).This will help me be more selective on my entry. 


Open Trades 

Short

CIGX, ATRS, SUPN

Puts

CIGX ($3.50 Aug), SNTA ($5 July), OSUR ($12.50)

Long
UNIS, ACAD

2012 Returns

July, -0.5%
June, -3.4%

May, 10.4%
April (blog inception),  -1.8%

Poor plan (AMPE)

AMPE was a poor trade but a profitable one.


There are many reasons to short AMPE. It has poor assets, questionable management & a share  price up over 100% over the past month for no good reason. 


However this was still a poor trade. I did not have a clear plan, I took a part position because I could not use up a day trade, but the position size was too big given that the stock was a potential squeezer (thinly traded, up on big volume, incentive for manipulation & seeking alpha article). I added to the position to get an average of $5, this was a fairly big position given how volatile the stock was. 


The next day, management defended allegations of stock promotion, by delaying one of the  stock lockups (mid July stock lock-up). The next morning the stock popped to $6 (with no available shares to short). We were sitting on a big unrealised loss, with the possibility the stock could keep surging. Fortunately the AMPE share price has faded ever since. Most likely insiders have taken advantage of the end of June stock lock-up. 


I covered on Friday 4.60's av.

Open Trades 

Short

CIGX, SYNC, ARNA

Puts

OSIR ($10 July), CIGX ($3.50 Aug), SNTA ($5 July)

Long
UNIS, ACAD, 

2012 Returns

July, -2.5%
June, -3.4%

May, 10.4%
April (blog inception),  -1.8%

Lacked patience (TLON)

Started Short on this at 1 then 1.15 then 1.25 av 1.13. 

Theory was TLON need to dilute as the company desperately needs cash and has a PDUFA date within the next couple of months. Last night the company raised cash via preferred shares. It had no affect on the share price and I covered at 1.33. A 20c loss on a fairly small position. 

In general the theory was ok, but av into a trade makes no sense, I should have only been trading ridiculously big moves. There was an op to short 1.50 a couple of days ago, off a huge morning parabolic, this is a perfect setup for entry on a trade like this.

Open Trades 

Short

CIGX, AMPE, HZNP

Puts

OSIR ($10 July), CIGX ($3.50 Aug), SNTA ($5 July)

Long
UNIS, ACAD, 

2012 Returns

July, -2.0%
June, -3.4%

May, 10.4%
April (blog inception),  -1.8%

The bad 'bad news short' (SNTA)

I traded the bounce (2nd bounce, so not a traditional bad news trade) on this one (s/s 5.38), trade size was the equivalent of about leaving 30-40c risk. The trade never went my way. Yesterday it looked as though it was, the stock spiked in the morning (I never went short – not having enough day trades), I then took half of the position off at 5.70, when a volume pop late in the day started upward trending the stock. Why I didn't take all the position off I don’t know. This type of play is perfect for a morning gap up. And sure enough it did. Should have trusted my instinct but was too stubborn to take the whole play off.

Next morning, form 4's show management have been buying the dip and three seeking alpha articles are covering it, stock grinds up to $6.40. Thinking of re-adding, to hopefully catch a fade back to $6. Was late in knowing there had been any director purchases, shows the importance of updating my twitter watch-lists at the end of each day.

Mistakes:

Not sticking to the plan;

Only partially recognising reversal;

Not managing day trades well enough (Pattern Day Trader Rule);

Should be extra cautious when the set-up is not a traditional one (2nd day bounce); and

Not updating Twitter lists (daily)

Open Trades 

Short

TLON, CIGX, AMPE, SNTA, HZNP

Puts

OSIR ($10 July), CIGX ($3.50 Aug), SNTA ($5 July)

Long
UNIS, ACAD, 

2012 Returns

July, -2.5%
June, -3.4%

May, 10.4%
April (blog inception),  -1.8%