NEW YORK ( TheStreet) -- Sarepta Therapeutics (SRPT) is slated to announce key data on the company's Duchenne muscular dystrophy (DMD) drug candidate eteplirsen at the International Congress of the World Muscle Society in a late-breaker session on October 13. Recent favorable press, momentum from a string of positive results, and speculation about the possibility of accelerated approval have catapulted the stock from $4 to over $16 per share over the past several weeks. On Sept. 4, Sarepta announced a $40 million at-the-market equity offering; shares subsequently sold off to around $13.
The October options, the expiration nearest to the late breaker session, currently imply an up or down move of around $7 per share (Sarepta could rise to $20 or fall to $6.) Traders wishing to speculate on an upside move face a high-risk proposition by buying equity and holding into the eteplirsen results. Bad data could potentially result in an immediate 50% loss or more on one's initial investment. An alternative (and I believe preferred) approach is to use trade Sarepta and the upcoming eteplirsen data announcement with options.
Try this Sarepta options trade if you want to speculate on the long side:
Sell (10) OCT 7.50 strike Puts at 0.90 = $(900)
Buy 20 OCT 15.0 strike Calls at 2.95 = $5,900
Sell (40) OCT 20.0 strike Calls at 1.75 = $(7,000)
Buy 20 OCT 25.0 strike Calls at 1.05 = $2,100
Initial Trade P&L = $100 Debit
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV