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I'm watching PCLN myself. It hasn't disappointed in the last 4 earnings quarters. I won't be buying into earnings but I will pick up some shares after earnings. It is looking to move on average 8%.
I'm watching PCLN myself. It hasn't disappointed in the last 4 earnings quarters. I won't be buying into earnings but I will pick up some shares after earnings. It is looking to move on average 8%.
I jumped in to take advantage of the option premiums losing so much air once the news is out.
bought 1 monthly 595 call for $23.70
sold 1 weekly 630 call for $6.10
ooops, I had an order to buy a 590-555 put spread but time ran out.
From their website the news is out.
Revenues expected $968M and they had $991M.
Earnings expected $5.05 and the whisper number was $5.31 and they had $5.37.
Sounds like a good report.
Does it support a $600 stock?
Only the stock market gods know for sure.
They are guiding down and lower than expected for the next quarter. Stock may fall fast on that news.
Guiding lower than expected for next quarter, stock still up to $617.00.
Spreads like me, need a hold below $630 by Friday.
Go PCLN.
I invested $1700 since the shares were so expensive.
Who can afford 100 shares when a call spread gives the same control as 100 shares.
Guidance is better than expected.
I was looking at the very fast headlines and saw GAAP for the 1st quarter which looked low, but the street expectations are on NON-GAAP = guidance higher than expected.
This article suggest buying the stock and the June 8 put option for a maximum loss of 5% and unlimited upside.
Based on current prices, we believe that this trade is best executed using the $8 put. While it has the most downside of all 4 possibilities, it also requires the smallest upside move in the stock to be profitable. We think maximum downside of 5% versus 3.56% or 1.3% is a worthwhile tradeoff when the upside move needed for profitability is just over 16%, compared to 29% or 40%.
Should Dendreon shares plunge because of either poor Provenge data or concerns over positive data from Medivation or Johnson & Johnson, investors are protected from most of that plunge, and will lose just 5% using the $8 put.
Conversely, if Dendreon reports positive data, or Medivation/Johnson & Johnson fail to impress with their own data, the stock will likely soar. Investors will profit if the stock moves past $8.40, which represents an upside move of at least 16.34%. Given Dendreon's very high beta, as well as the large short interest in the stock Dendreon's shares should be able to easily rally at least 16.64% on the back of positive news, as well as a possible short squeeze in the stock, given that over a fifth of the company is sold short.
There are 3 possible outcomes by the put's expirations for investors who initiate this trade. Should the stock trade anywhere below $8, losses are capped at 5%. Between $8 and $8.40, losses are smaller. And should the stock rally past $8.40, which we feel is a distinct possibility if everything lines up in Dendreon's favor, investors will profit.
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