Sarepta Therapeutics, Inc. (SRPT): $36.13 Target: $50.00
PTC Therapeutics, Inc. (PTCT): $14.71 Target: $25.00
Why we like these stocks:
Both SRPT and PTCT develop drugs for different types of Duchenne muscular dystrophy. Because of their extremely high cost and controversial history with respect to running clinical trials differently from the norm and/or questionable efficacy, these drugs always get some pushback from regulators, insurance companies and other naysayers. The DMD community is very strong in support of any drug that can extend and improve the quality of life of the boys who have this disease. We believe that these two drug companies will continue to successfully market their drugs to the U.S. and/or Europe and any major pullback is a buying opportunity. The back-and-forth between the supporters of DMD treatments and health case regulators and insurers who have doubts cause wild spikes and dips in both stocks. The increased volatility of these two stocks allows for tremendous returns by writing covered calls which also decrease downside risk.
Trading strategy on SRPT: Buy stock at $36.13, sell $42 February 17 covered calls at $2
Buying the stock and selling the covered call results in a net cost of $34.13, which is 6% downside coverage to yesterday's closing price. If the stock is above $42 by February 17, the total return will be 23%, which is very good for a month's return. This is not quite as favorable as buying the stock at $36.13 and waiting to sell at $50.00 for a 38% return, but the risk-return profile over the next month favors the covered call strategy. Even if the options were exercised, there would be a good chance that you could buy the stock for less than $42 once again soon after based on the choppy history of the chart. Should the option expire worthless next month we can revisit this investment while pocketing 6%.
Trading strategy on PTCT: Buy stock at $14.71, sell $19 March 17 covered calls at $2
Buying the stock and selling the covered call results in a net cost of $12.71, which is 14% downside coverage. If the stock is above $19 by March 17, the total return will be 49%. This is not quite as favorable as buying the stock at $14.71 and waiting to sell at $25.00 for a 70% return, but that is unlikely to happen before March and doesn't offer any downside protection. The stock would have to be $21.91 to offer a 49% return at $14.71. Should the option expire worthless in March we can revisit this investment while pocketing 14%.
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PTC Therapeutics, Inc. (PTCT): $14.71 Target: $25.00
Why we like these stocks:
Both SRPT and PTCT develop drugs for different types of Duchenne muscular dystrophy. Because of their extremely high cost and controversial history with respect to running clinical trials differently from the norm and/or questionable efficacy, these drugs always get some pushback from regulators, insurance companies and other naysayers. The DMD community is very strong in support of any drug that can extend and improve the quality of life of the boys who have this disease. We believe that these two drug companies will continue to successfully market their drugs to the U.S. and/or Europe and any major pullback is a buying opportunity. The back-and-forth between the supporters of DMD treatments and health case regulators and insurers who have doubts cause wild spikes and dips in both stocks. The increased volatility of these two stocks allows for tremendous returns by writing covered calls which also decrease downside risk.
Trading strategy on SRPT: Buy stock at $36.13, sell $42 February 17 covered calls at $2
Buying the stock and selling the covered call results in a net cost of $34.13, which is 6% downside coverage to yesterday's closing price. If the stock is above $42 by February 17, the total return will be 23%, which is very good for a month's return. This is not quite as favorable as buying the stock at $36.13 and waiting to sell at $50.00 for a 38% return, but the risk-return profile over the next month favors the covered call strategy. Even if the options were exercised, there would be a good chance that you could buy the stock for less than $42 once again soon after based on the choppy history of the chart. Should the option expire worthless next month we can revisit this investment while pocketing 6%.
Trading strategy on PTCT: Buy stock at $14.71, sell $19 March 17 covered calls at $2
Buying the stock and selling the covered call results in a net cost of $12.71, which is 14% downside coverage. If the stock is above $19 by March 17, the total return will be 49%. This is not quite as favorable as buying the stock at $14.71 and waiting to sell at $25.00 for a 70% return, but that is unlikely to happen before March and doesn't offer any downside protection. The stock would have to be $21.91 to offer a 49% return at $14.71. Should the option expire worthless in March we can revisit this investment while pocketing 14%.
If you liked the advice given here, follow our blog by clicking the follow button at the top of the left hand panel. Also, have a look at other trading and investment resources below.
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If you're interested in trading options, both calls and puts on certain large cap stocks, binaryoptionsprosignals.com sends real-time trading signals on a select group of stocks, forex pairs and commodities. The site claims over 70% accuracy thanks to a combination of trading algorithms and technological advances which allow it to produce signals through predictive software.
The report currently sends out alerts on Apple, Google, IBM, JP Morgan Chase, Coca-Cola, ExxonMobil, Facebook, Alibaba, Dow Jones, and S&P 500. Click here for access to the top rated signals for binary options
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Unlock the key to winning on the market in 2017. What the Trump rally of 2016 shows is the importance of being in the right sectors of the stock market. A lot of stocks lagged the Trump rally, but the stocks in the right sectors simply exploded. In any given year there are going to be sectors that lead and go up more than the market averages and some that do much worse, however sector rotation strategies are a core principle that most people have simply lost track of in the past few years. WallStreetWindow's Total Portfolio Package can help investors with sector rotation strategies
Microcap Millionaires Free Video: How To Score Up To 1,400% Gains With "Weed Stocks"
Marijuana stocks were lightning hot last year, the cream of the performance crop in the microcap sector. Microcap Millionaires can show traders how to make up to 1,400% gains in this sector after the U.S. election netted positive results for the industry across several states.
TraderReview: Professional Daily Market Strategy Newsletter
Learn to trade stocks, options, commodities and forex profitably with Trader Review's secret charting methodology with instant portfolio access to their picks.
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