NaughtyPines

TRADE IDEA: VRX NOV 18TH 17.5 SHORT PUT

NYSE:VRX   VALEANT PHARMACEUTICALS INTERNATIONAL INC
Okay, so there's other "big pharma" that I like wayyy better than Valeant (e.g., BMY             , GILD). The problem is that BMY             and GILD are more expensive and don't have the implied volatility that VRX             has (for obvious reasons: they don't have as many "warts" as VRX             ).

Nevertheless, I'm watching VRX             here because its implied volatility is so high (>100%), which makes relatively far out-of-the-money short puts comparatively rich in premium.

Here, I'm eyeing the 17.5 short puts for obvious reasons -- that strike is below historic lows for this poo pile. Moreover, with an implied vol of >100%, I can get .83 ($83) in credit per contract "at the door," which makes it quite attractive for an underlying at this price. The notion here would be to either (a) keep the premium; or (b) get put the shares at 17.5, after which I would sell calls against (covered call).
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