Trades for 2010/08/23 (JAZZ)

[cosmic]

Well, the results are in on the JAZZ trade and they aren't what I expected. Even though the closing price of the O.C.C. was determined to be 10.23, I was 'randomly chosen' by TDA to be assigned on the short puts. The short calls expired worthless.

So the dilemma is my average, including premiums, is around 8.63, and the stock is trading sub-$8 on the news that Xyrem will not be approved at this time.

I have added Sep 7.5 long puts as downside protection while I determine the best course of action. This creates somewhat of a straddle although the Delta on the 7.5's kind of sucks. I am also looking at the Sep 9 puts.

It's quite ironic, the worst possible happened, even though the entire transaction was rigged to prevent it. In the end I wanted no position in JAZZ, and now it's twice as large, and the stock has fallen.

This here, folks, is the danger of playing with options ;D

For the position size, it's annoying, but not the end of the world... yet.

[cosmic]

I have sold my shares. I took a loss of .80/share, and that is Net, after the premiums were applied.

I am sill holding the 7.5 puts long.

The chart is painting a symmetrical triangle at 7.80-7.81, and I continue to be bearish. I can always jump in, but do not want to lose further capital at this point other than what has already been committed.

Being a put writer has it's disadvantages when there is a significant event. That being said, if the stock is not trading, and the option is not trading, then the long put or long call buyer should be barred from exercising. However, that is not how the rules are written.

[cosmic]

Literally minutes after this post, JAZZ jumped .10

[exabi]

Note to self - don't trade on a stock with an FDA review on OPEX...another checklist item. I have not paid close attention to the JAZZ YMB, but I have not seen anyone stating their 10 calls were assigned.

[cosmic]

Exactly. Now according to TDA, if you had the 10 calls, you too could call up and ask for an exercise.

Of course you wouldn't do that. Why not? Because FDA had already ruled and the stock was being slammed.


To me, if everything about the stock is dead in the water on a specific date, so are all of it's derivatives and derivative 'contracts.' They are dead at the price the OCC says they are dead at. No games.

[cosmic]

Spoke with Telsa Rowe regarding the 7.50 puts

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