NaughtyPines

SOLD SRPT JUNE 17TH 6 SHORT PUT

NASDAQ:SRPT   SAREPTA THERAPEUTICS INC
Although there are some warts on this particular trade (namely, the reason why SRPT             tanked today) and the fact that liquidity in the options is not that great, I couldn't resist getting over $100 credit on a short 6 .... .

Metrics:

Probability of Profit: 65%
Max Profit: $125/contract
Max Loss: $475 (the strike price minus the credit received).

Notes: Some price discovery may be worthwhile here. I got filled for $118, but if I'd been slightly more patient, I probably could have gotten a few more bucks out of it. I'll look to take it off at 50% max profit.
Comment: This is kind of a lesson in why getting into a trade with a low liquidity underlying/low liquidity options can suck in the short term. Price popped substantially after I entered the trade; however, due to low volume/open interest in the June 17th 6 put, price in the option hasn't moved much ... .
Comment: Covering for a $107 credit, so it's basically a $5 winner after fees/commissions. 20-20 hindsight: work FDA approval stuff like earnings: keep it close in time ... .
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