Another perfect bubble pattern presents itself. By comparison APHA overlayed in yellow shows how similar and easy to recognize the pattern is. The only difference between the two is APHA happened about 2 years earlier (2017 vs. 2019)
Whether the fundamentals stack up or not, the pattern is remarkably similar to other recent bubbles (last 2 years).
Comment
⋅
Another comparison with Litecoin, one of the biggest bubbles in the crypto run-up
Comment
⋅
Comment
⋅
pullback expected to last anywhere up until the 100$ region. Then a resumptions downwards
@MysteriousPersian This is an unique short idea since there's a loyal following to this company. However, I do think many biotech stocks are being overvalued during the COVID-19 crisis. As things normalize, many will decline significantly. Besides the similarities to APHA, any other reasons you would short this?? Seems like tomorrow morning might be a good time to make a decision on this.
MysteriousPersian
⋅
@BinSF, It is just significantly overvalued if you look at its balance and income sheets. It had a massive run-up since 2019 in line with many other stocks. It's not unique in and of itself, It looks like any other bubble and APHA is merely one example. I can pull out DOZENS of other patterns on other stocks that look exactly like this and also ended up being bubbles that burst.
BinSF
⋅
@MysteriousPersian, Hi there, just wanted to follow up on our conversation. I actually bought the June19th back in May when you mentioned this because I liked your model. Currently I'm down around 38% on the puts but I'm patient if you think this will drop further. AXSM was trending down in a sideways fashion, then finally a strong green day today. But it's tough to pick short plays when the market is so strong. Do you still see this trending down? Wondering if I should cut my loss now or ride it out a couple more weeks. I know it's guess work but just curious your thoughts as you prob can estimate better than me. Thanks again.
MysteriousPersian
⋅
@BinSF, Im not a fan of short term options for a few reasons. Every time I play put options, I always go for LEAPS because timing the market is very hard. You can see that most bubble tops take anywhere from a few weeks to MONTHS before collapsing. I bought puts but they are expiring in January 2021 and they are heavily out of the money. Im expecting to be mostly sideways as markets recover and become euphoric again and a real crash in price action happening anytime between mid-June and end of September/October.
Unless you're playing the earnings release or there is important news ahead, I find it near impossible to make short term options plays unless you catch the crash in action. Basically, what Im saying is it's still forming an ugly top and it could take weeks maybe even months before it resumes a solid trend down.
MysteriousPersian
⋅
@BinSF, what is the strike on your options? Another reason I don't like short term dated options (a couple of months left till expiry) is that in the last 2-8 weeks before an option expires it loses a tremendous amount of time value, and that tends to really screw up your trades especially if you are OOM.
MysteriousPersian
⋅
@BinSF, If I were a betting man I'd say you went OOM and the 38% you lost is purely time value because of the shorter term expiry. Youll have to make a decision how you play this out but Id be swinging the downturn on this one for several more months before calling it.
BinSF
⋅
@MysteriousPersian, thanks for the detailed reply. I sent you a private message on AXSM.
MysteriousPersian
⋅
@BinSF, the fact that the stock itself has a loyal following raises even more flags. This is ringing the same bell as the crypto bubble nobody is realizing.