NEW YORK ( TheStreet) -- For outsiders watching, it may appear Onyx Pharmaceuticals ( ONXX) shares are equivalent to holding a winning lotto ticket after Amgen's ( AMGN) unsolicited $10 billion bid to buy Onyx.For outsiders with Onyx shareholder neighbors, this Independence Day celebration may turn into a long weekend. I feel for you, and know all too well what a joy listening to a "see how smart I am" dissertation is -- especially from someone who conveniently forgets their losers. However, shareholders have more, not less, to consider after the first offer was rejected. If you're an average Onyx shareholder, you're probably spending your fair share of time staring at your phone checking the latest price. A downside of iPhones and other smartphones is the amount of time they enable you to waste checking stock prices 6,587 times a day. If that sounds like you, I have another solution. You should read my thoughts on the probable ceiling price. Take a look at the August Onyx option chain. For less than $2, you can buy insurance that your shares will be worth at least $120 until the expiration date. Buying a put option gives you the right, but not the obligation to sell your shares at a set price and within a specified time period. The August monthly options don't expire for over 40 days. The entire offer could fall apart, or Onyx could even go out of business in the meantime for all you care because you know someone committed to buying your shares at $120 at your command. If the trading stars align in your favor and Onyx is the target of a bidding war, that skyrockets the shares, you remain in the game to profit. Remember, when you buy an option you can sell the corresponding shares at any price you wish, albeit while the option is exercisable -- you have an effective floor. For many investors, staying in for greater gains while enjoying restful sleep is a winning strategy. For those questioning if 44 days is enough time, I tend to agree that it likely won't be. The November $120 strike price options with 134 days until expiration are about $3.
Will the options probably expire worthless? Yes, you shouldn't buy put options in hopes of realizing a gain in this case. The reason they make sense for some investors is the same reason you buy homeowners insurance. You don't expect to use it, but on the off-chance you need it, you're happy to have it. At $3, it beats taking a sleeping pill. If you're an outsider with your nose pressed against the glass, wishing you could join in on the party, it may not be too late. If you think bidders for Onxy will catapult shares higher, you also can use the above-described method of limiting risk. Speculators can buy shares at the current price while limiting total downside exposure to $16 ($3 for the November option and $13). If bidding heats up and shares increase to $140 or more, you participate the whole way (while simultaneously neutralizing "friendly neighbors"). In order to profit, the shares need to appreciate at least $3 more than your purchase price. At the time of publication the author had no position in any of the stocks mentioned. Follow @RobertWeinstein This article was written by an independent contributor, separate from TheStreet's regular news coverage.