Traders who prefer options can buy puts or sell calls on the approval price spike, betting the share price will pull back before the options expire. More experienced traders can also build complex options setups, such as butterflies or condors, to take advantage of the implied volatility in share price and creating windows of maximum profitability before the actual FDA decision is announced.
Traders who don't mind taking a bit more risk can even short Alexza just before the expected FDA decision. If FDA surprises the market by rejecting Adasuve, Alexza's stock price will plummet and the trading profits will be huge. An advantage to shorting pre-approval is that finding shares to short post approval can be difficult.
Messier has no current position in Alexza but he may short the stock following the FDA decision on Friday.
Select the service that is right for you!COMPARE ALL SERVICES
- $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
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV