Alexza Pharma: Premium Selling Options Strategy
NEW YORK (TheStreet) -- Alexza Pharmaceuticals (ALXA) has a FDA drug approval decision date for its Adasuve treatment of agitation associated with schizophrenia and bipolar disorder on Dec. 21, 2012. Options currently imply of move of around $3 per share (up to $8 per share or down to $2 per share.)
Adasuve has faced a challenging path to approval and so the upcoming FDA decision, either positive or negative, remains uncertain. In situations where uncertainty is high and premiums are expensive, it is often a good idea to sell premium in a directionally neutral manner.
Here is the trade:
Sell (10) JAN 4.0 strike Puts at 0.95 = $(950)
Sell (10) JAN 7.0 strike Calls at 0.95 = $(950)
Initial P&L = $(1,900) Credit
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