Originally Posted by klpv82
Hey 22rowdy. I'm just trying to learn here, so can you explain a little more why you were short on VVUS even though it seemed like their drug would get approved?
Well, I wasn't "short", I had an options strangle which basically means I was betting the stock would move big but wasn't sure on the direction (up or down).
I was bearish because of the safety concerns and the fact that this isn't a new drug, it's just 2 approved drugs used in combination. To tilt the options strangle towards my bearish sentiment, I put 3x as much money in puts as I did in calls. That way I would at least break even or come close to it, if I was wrong.
I'm convinced the only way to play these biotech binary events is with options straddles or strangles. Profit from the move regardless of direction. I'm new to this and still making mistakes, but the strategy has potential, imo.