Weight loss could mean portfolio gains

An expert discusses ways to invest in a new drug before a key panel review.

By Wall Street Media on MSN Money Jun 28, 2010 1:17PM

Written by Douglas Estadt

 

Adam Warner, our go-to options guy and the author of "Options Volatility Trading" and dailyoptionsreport.com, joins us to discuss alternative ways to invest in VVUS (VVUS) prior to the July 15 panel review date of the company's new weight-loss drug.  The stock is currently in the $10 range for common shares, and it stands to rise substantially if the panel review is positive.

 

  • A bullish approach—buying  calls on the 10s and selling 15s, could triple your money if the panel’s review is positive
  • A bearish approach—buying a put spread (buy 10s, sell 5s)
  • Options expire July 16th, just one day after the panel review
  • FDA’s decision on the new weight-loss drug will be made on October 23 and will depend heavily on the conclusions of the panel review
  • VVUS has another drug following the weight-loss drug that should be more easily approved by the FDA and favorable for VVUS common shares
To hear more on ways to invest in VVUS, view the video below

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