Long-term, low-risk benefits with options
A new way to trade VVUS using Options
Written by Douglas Estadt
Make money over time, and make use of the markets properly. These are the words of my friend Ash Rust, a wise-beyond-his-years options trader I met on StockTwits.com last year. Because we learn from each other on StockTwits, we often circle back to trade the same stock, with whatever technique we use to trade.
That has happened with Vivus Inc (VVUS). VVUS is a stock we both like. VVUS is a biotech with a proven weight-loss drug right on the horizon and a very promising drug for E.D. in Phase 2 trials. Here are the key reasons today Ash shorted Jan. 2011 put verticals from 10 & 7.5:
If stock goes above 10 before Jan 2011, he makes 144%.
Because he shorted from a position below 10, this is an income trade. This stock is volatile, and his position will add money over time.
When you short options that are volatile, you risk less than you have maximum gain.
Watch the video below to learn about Ash's thesis.
To see where I have my investment dollars now, or to follow my picks, click here.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The Chinese e-commerce website's transaction volume dwarfs that of eBay and Amazon.com, but the company's size could be its worst enemy.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.