pacira exparel question

[caligas]

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Can somebody explain? obviously bad for pacira based on stock price response.

http://www.cnbc.com/id/102467536

 

[Tuohy]

http://news.yahoo.com/fda-rejects-paciras-application-expanded-pain-drug-115518995--finance.html

Here you go...

 

[caligas]

Ahh. Makes sense now.

 

[Mman]

PCRX down about 15% today on the news. Not good for recent investors. Anybody that's been in for 6 months or longer is still up quite a bit, though.

Still shocks me at the valuation of the company, though. Last 12 months they've earned revenue of $4.87 per share, but lost $0.92 per share after expenses. They've never turned a profit having lost money every year since going public in 2008 yet somehow they are still going for nearly $100 a share. Just seems odd to me to buy a share of stock for $100 for almost $1 loss for the year. For the added bonus, as a company they have about $150M in cash on hand but >$100M in debt due in the next 12 months. I mean instead you could buy a share of something like Chevron for almost the same price and they've earned $111 in revenue per share the last 12 months and a profit of $10 per share and paid back $4 in dividends.

I mean if Chevron never grew one bit, it'd take Pacira something like 10-20 years to break even with them in profit per year (per share) assuming the best case for them financially (including that they ever stop losing money despite increasing revenue). And that ignores the fact Chevron's revenues (per share) would smoke them for the time it took to catch up. But the odds of Chevron never growing their profit one bit are probably smaller than the odds of Pacira having everything break their way.


But that's just me. I have a particular way of thinking about investments and taking flyers on small money losing companies isn't up my alley. I understand others can disagree.

 

[epidural man]

Chevron's market cap is 198 billion - vs 3.44 billion for Pacira. If you buy one share of Chevron for $100, you own 1/1.88 billionth of the company. If you buy 1 share of Pacira, you own 1/36 millionth of a company. That is a huge difference. A $100 dollar buy of Pacira gets you a lot more ownership of the company then owing 1 share of Chevron.

 

[Mman]

Chevron's market cap is 198 billion - vs 3.44 billion for Pacira. If you buy one share of Chevron for $100, you own 1/1.88 billionth of the company. If you buy 1 share of Pacira, you own 1/36 millionth of a company. That is a huge difference. A $100 dollar buy of Pacira gets you a lot more ownership of the company then owing 1 share of Chevron.

That's why I quoted per share revenue, profit/loss, dividend, etc.

Raw numbers are obviously drastically skewed towards Chevron simply on account of size. That's why I used the per share numbers. Buying 1 share of Chevron stock for about $100 gives you a company that generates about $11 in profit per share on well over $100 of revenue each year. Buying 1 share of Pacira gives you a company that makes about $4 of revenue per year and loses about $1 per year.

For example. Chevron takes in over $200B in revenue each year with a net income (after tax, after costs, etc) of $19B per year. Pacira takes in about $170M in revenue with a net loss of $31M. While you would get a bigger share of the company for $100, you'd get a bigger share of a much more terrible company financially. That's why you should always analyze companies on a per share basis.

 

[epidural man]

I see....

 

[Mman]

It's just interesting to me how things get valued in the market. Efficient market hypothesis would suggest that the share prices are always up to date with what we know about companies. But that can't be right. Plenty of companies are priced at astronomical levels that would need insane amounts of growth to support. A few will go on to do that and justify the price, but most fall by the wayside. I just can't see those as an investment. They are purely speculative IMHO.

I merely used the Chevron example since the companies are polar opposites (industry, size, profitability, etc) with share prices that are similar (and the fact I bought some more Chevron today since it was on my mind). I was kinda surprised by the amount of debt coming due that Pacira has when I looked at them. 2/3 of their debt is payable in the near term which is not necessarily a good thing. By contrast Chevron has like 200-300 million in debt coming due but they have 13 billion in cash laying around so it's barely a blip on their balance sheet.

 

[pgg]

Chevron's market cap is 198 billion - vs 3.44 billion for Pacira. If you buy one share of Chevron for $100, you own 1/1.88 billionth of the company. If you buy 1 share of Pacira, you own 1/36 millionth of a company. That is a huge difference. A $100 dollar buy of Pacira gets you a lot more ownership of the company then owing 1 share of Chevron.

So what you're saying is, it's cool that Pacira just keeps losing money hand over fist, because their hands are small?

You were so, so, so sure that the FDA would jump on board with Exparel for PNBs. Like it was inevitable, a total no-brainer, just like "buy low sell high" is an obvious no brainer, easy in theory, not easy in practice. Can you now at least admit you're just gambling with this stock pick?

Exparel, which was approved in April 2012 for post-surgical pain, generated 95 percent of Pacira's nearly $197.6 million in revenue last year.

I wonder if Organon would be around still, if they'd been a one-trick-pony in 2001, and not a diversified pharmaceutical company with 80 years of success behind them.

 

[BLADEMDA]

I'm wondering if safety wasn't the issue but lack of efficacy in their submitted trials. I suspect their phase 3 trial for Femoral nerve block indication didn't impress the FDA. It's too bad the FDA has to look at efficacy and safety as Exparel is a safe drug.

 

[BLADEMDA]

Pacira had been expecting a significant rise in Exparel revenues for 2015, with estimated sales in the range $310-330 million; of which almost 10% were expected to come from the expanded label of the drug. With the FDA’s recent decision, these projections prove to be highly over optimistic.

Pacira Pharmaceuticals became aware of the disappointing news in a Complete Response Letter (CRL) from the FDA in the morning today. The FDA sent it in response to a supplemental New Drug Application (sNDA) Pacira submitted earlier for seeking the expanded use of its lead drug EXPAREL (bupivacaine liposome injectable suspension), used for blocking nerves to act as a post-surgical analgesia.

Exparel, the company’s top selling drug working as a non-opioid local anesthetic, was first approved by the FDA in October 2011 and launched inside the US in April 2012. It was to be injected into the surgical site to offer postsurgical analgesia and serve as a pain reliever, especially in instances where it becomes problematic to inject a painkiller in the site of impact directly.

Exparel, used as single-dose infiltration, has the distinctive advantage due to its use of the DepoFoam platform, which is a propriety technology of the company; also used in various other Pacira drugs for enhancing a drug’s delivery over a specified time period. Furthermore, Exparel happens to be the first and only “multivesicular liposome local anesthetic” that can be used in the post-surgical site.

However, even after the drug’s failure to secure an expanded approval as per the FDA’s recent rejection, Pacira Pharmaceuticals will not lose hope of the large potential of enhanced success that its lead drug holds for the long run. Pacira said today it is going to further enhance its efforts and will be adamant on securing a definitive expanded use for Exparel, which would increase the drug’s use for a larger number of post-surgical patients.

 

[dhb]

I wonder if Organon would be around still, if they'd been a one-trick-pony in 2001, and not a diversified pharmaceutical company with 80 years of success behind them.

It is marketed in the EU though

 

[pgg]

It is marketed in the EU though

What is? Rapacuronium? I didn't know that was available anywhere.

 

[pgg]

I'm wondering if safety wasn't the issue but lack of efficacy in their submitted trials. I suspect their phase 3 trial for Femoral nerve block indication didn't impress the FDA. It's too bad the FDA has to look at efficacy and safety as Exparel is a safe drug.

It's OK if a drug doesn't work, as long as it's safe?

 

[urge]

I'm wondering if safety wasn't the issue but lack of efficacy in their submitted trials. I suspect their phase 3 trial for Femoral nerve block indication didn't impress the FDA. It's too bad the FDA has to look at efficacy and safety as Exparel is a safe drug.

Weren't you like 300% convinced that it was going to get approved?

Weren't you doing TAP blocks with it?

PS: I asked the regional "experts" at the last ASA about exparel and TAP blocks and they accused me of heresy for mentioning both together.

 

[epidural man]

So what you're saying is, it's cool that Pacira just keeps losing money hand over fist, because their hands are small?

You were so, so, so sure that the FDA would jump on board with Exparel for PNBs. Like it was inevitable, a total no-brainer, just like "buy low sell high" is an obvious no brainer, easy in theory, not easy in practice. Can you now at least admit you're just gambling with this stock pick?



I wonder if Organon would be around still, if they'd been a one-trick-pony in 2001, and not a diversified pharmaceutical company with 80 years of success behind them.

I wasn't sure at all. I thought it very likely the FDA would require more data. I would like to know why they denied the sNDA. The FDA is not a reputable bunch, so who knows what they will do, whose money has influenced them, etc.

Also, I wasn't saying anything about PCRX being a better buy than Chevron - just pointing out that there is more to it then just comparing price. I still think it is a good buy - better today. There is no way that 20$ of the stock price was based on a nerve block indication that was only going to produce 10% revenues. This is just over reaction - and probably some more over reaction coming - but good chance to buy a dip.

 

[epidural man]

Weren't you like 300% convinced that it was going to get approved?

Weren't you doing TAP blocks with it?

PS: I asked the regional "experts" at the last ASA about exparel and TAP blocks and they accused me of heresy for mentioning both together.

Really? I wonder why. He must not be much of an expert. Most experts don't make ridiculous comments like that.

 

[Mman]

I wasn't sure at all. I thought it very likely the FDA would require more data. I would like to know why they denied the sNDA. The FDA is not a reputable bunch, so who knows what they will do, whose money has influenced them, etc.

Also, I wasn't saying anything about PCRX being a better buy than Chevron - just pointing out that there is more to it then just comparing price. I still think it is a good buy - better today. There is no way that 20$ of the stock price was based on a nerve block indication that was only going to produce 10% revenues. This is just over reaction - and probably some more over reaction coming - but good chance to buy a dip.

What exactly is the stock price based on then? It surely isn't based on anything the company has ever done. I mean if your neighbor offered to sell you his home business that has lost money every year it's ever run, would you be jumping at the bit?

It's a "growth" stock. People are doing mental calculations on future sales and rates of increase that can continue forever and projecting what that might be worth in today's dollars. Unfortunately if the calculation is off by a little, the value of the purchase can come crashing down. That's why the stock price plunged. It's because the people willing to believe anything about the future growth of the company are now starting to question it just a little after today's FDA letter. I mean as it currently stands the company probably isn't worth more than $1-5 a share. It's only the hope of future revenue growth that drives it to astronomical valuations. If they were to get rebuked by the FDA again, you'd probably see a further 20-50% drop in the stock price. Why? Because almost all the revenue they take in as a company is from Exparel. If they can no longer have massive potential growth of that drug, all of a sudden they are just another little company hemorrhaging money and not a hot growth stock with unlimited potential.


As for comparing Pacira to Chevron, of course there is more to comparing them than price. That's why I brought up the financials and debt positions of the companies. The only way Pacira is equally valued "per share" (like they are now) is if you believe Pacira will have unbelievable growth in the future and for a long time. Could it happen? Of course it could. Personally I'm not betting on it, but it could happen.

 

[Mman]

Really? I wonder why. He must not be much of an expert. Most experts don't make ridiculous comments like that.

Yes they do. At least in private. They won't say it in public.

 

[urge]

It's a "growth" stock. People are doing mental calculations on future sales and rates of increase that can continue forever and projecting what that might be worth in today's dollars. Unfortunately if the calculation is off by a little, the value of the purchase can come crashing down. That's why the stock price plunged. It's because the people willing to believe anything about the future growth of the company are now starting to question it just a little after today's FDA letter. I mean as it currently stands the company probably isn't worth more than $1-5 a share. It's only the hope of future revenue growth that drives it to astronomical valuations. If they were to get rebuked by the FDA again, you'd probably see a further 20-50% drop in the stock price. Why? Because almost all the revenue they take in as a company is from Exparel. If they can no longer have massive potential growth of that drug, all of a sudden they are just another little company hemorrhaging money and not a hot growth stock with unlimited potential.

Has anyone been impressed by infiltration of Exparel? I haven't. I imagine the novelty will wear off quickly.

I thought the benefit would come from a light analgesic block that lasted a few days. There would not be a block in the any first world country that would not have Exparel.

I think the drug is going the way of Depodur.

 

[deleted126335]

What exactly is the stock price based on then? It surely isn't based on anything the company has ever done. I mean if your neighbor offered to sell you his home business that has lost money every year it's ever run, would you be jumping at the bit?

It's a "growth" stock. People are doing mental calculations on future sales and rates of increase that can continue forever and projecting what that might be worth in today's dollars. Unfortunately if the calculation is off by a little, the value of the purchase can come crashing down. That's why the stock price plunged. It's because the people willing to believe anything about the future growth of the company are now starting to question it just a little after today's FDA letter. I mean as it currently stands the company probably isn't worth more than $1-5 a share. It's only the hope of future revenue growth that drives it to astronomical valuations. If they were to get rebuked by the FDA again, you'd probably see a further 20-50% drop in the stock price. Why? Because almost all the revenue they take in as a company is from Exparel. If they can no longer have massive potential growth of that drug, all of a sudden they are just another little company hemorrhaging money and not a hot growth stock with unlimited potential.


As for comparing Pacira to Chevron, of course there is more to comparing them than price. That's why I brought up the financials and debt positions of the companies. The only way Pacira is equally valued "per share" (like they are now) is if you believe Pacira will have unbelievable growth in the future and for a long time. Could it happen? Of course it could. Personally I'm not betting on it, but it could happen.

http://www.cbsnews.com/news/whats-wrong-with-small-growth-stocks/

http://www.efficientfrontier.com/ef/499/inept.htm

 

[Mman]

Oh I agree that is an academic discussion of large portfolios of companies. I'm just referring to an individual company. What is it's "value" based on? To me even a cursory glance at their financials the last few years suggests no rational basis for it's current market valuation. It's really only the hope of the future that it is based on. To just play with numbers, let's pretend that in 2015 Pacira somehow turns a profit and earns $0.25 a share and that the stock is priced at 100. That'd be a big breakthrough for them to finally be profitable. What kind of growth would they have to show over the next decade to justify that stock price?

Assumption 1: we will compare them to other big pharma companies (avg P/E for big ones right now is around 20) because if they are growing that rapidly for that long they will be a big pharma company
Assumption 2: the stock market will remain fat and not go into some major downturn

So to get to an average P/E of 20 with a stock price of 100, Pacira would need to grow to earnings of $5.00 a share from the hypothetical profitable point of $0.25 a share we will pretend they get to in 2015. If you gave them a decade, that would be a 35% growth rate per year just to catch up to an industry average. If the market had a downturn and the average P/E was only 15, they'd need earnings of nearly $7.00 a share which would take an even bigger growth rate.

And keep in mind that rosy 35% growth rate per year from a profitable 2015 presumes the stock price doesn't move an inch. If you suspect the market will gain 8% per year, you'd need far bigger gains in growth rate for the stock price of Pacira to even keep pace with the overall market. So buying Pacira, you are probably paying for a stock with an expected growth rate of something like 60% per year for it to keep pace with the overall market. Is that reasonable or even likely?

 

[pgg]

Weren't you like 300% convinced that it was going to get approved?

Blade is always 300% sure of everything stock related ... what he's sure of just changes from time to time.

🙂

 

[BLADEMDA]

Weren't you like 300% convinced that it was going to get approved?

Weren't you doing TAP blocks with it?

PS: I asked the regional "experts" at the last ASA about exparel and TAP blocks and they accused me of heresy for mentioning both together.

1. I don't own PCRX as Doze talked me out of individual stocks 2 years ago. I now buy ETFs.

2. I like Exparel and use it daily for my TAP Blocks and sometimes for my Adductor Canal Blocks.

3. Exparel is safe and efficacious and I highly recommend it for sensory blocks.

4. I was hoping to expand my use of Exparel to other Nerve blocks once it got FDA approval; I will be waiting for FDA approval next year to do ISB/SCB/ICB/Femoral with Exparel.

PCRX should have submitted MULTIPLE studies showing Efficacy for multiple nerve blocks like TAP as well as Femoral. I've performed over 500 Nerve Blocks with Exparel and recommend it for long acting analgesia. That said, Exparel lasts an average of 36-40 hours for a TAP block vs 20-24 hours with Bup/Decadron. The former costs $280 while the latter costs $5.0

 

[dhb]

What is? Rapacuronium? I didn't know that was available anywhere.

I thought you were talking about suggamadex

 

[epidural man]

It's really only the hope of the future that it is based on.

This I totally agree with. The stock price currently is based on future use. But also, it is based on existing technology. Some may agree that the depo technology is pretty cool and useful and may find some really cool uses. Their next two projects, depo mobic, and depo TXA may turn out to be pretty cool.

What is the stock price based on? In my mind, the stock price - of ANY company is never based on anything that resembles reality. Remember when AAPL was over $700 and it fell to $400 overnight? Did they automatically stop selling phones? Did their computers start to blow up? Did China just strike and say they wouldn't assemble anything? No. Nothing happened. Apple kept on making a zillion sales. Absolutely NOTHING changed with their business, yet their market cap halved - probably because of some news report or hype being circulated. Stock price rarely follows reality. How about JcPenny a fews years back when they were loosing money hand over fist, almost folding - the stock price rose for MONTHS. Then, when they regut, start to turn things around, the stock plummets. It made no sense. My point is, I don't think stock price rarely matches reality.

I also have the same complaint about the Market. The market is just as ******ed. A report comes out today and makes the market dip 300 points, then the next day, another report showing something exciting and it rises 300 points. Really? In one day, economics of our country turned around that fast?

I will say this about PCRX stock. It is a great cycling stock to scalp.

4. I was hoping to expand my use of Exparel to other Nerve blocks once it got FDA approval; I will be waiting for FDA approval next year to do ISB/SCB/ICB/Femoral with Exparel.

Just curious, why do you need FDA approval to use on a peripheral nerve? We know the depofoam is extremely safe and not going to hurt a nerve (FDA approved in intrathecal space).

 

[Mman]

What is the stock price based on? In my mind, the stock price - of ANY company is never based on anything that resembles reality.

I'd agree that sometimes stock prices (and the market in general) can do that, but I believe that many stocks are priced rationally most of the time. The nice thing about the stock market is that nobody forces me to buy or sell anything, it's merely a price offered for something I can either take or leave. That's what I prefer to purchase stock in companies that are fundamentally sound and profitable and for whatever reason happen to be temporarily mispriced at what I believe is a discount to their actual value. Disney is a company that is going to be around for a long time making a lot of money. I personally believe it's a bit too pricey to buy right now, but if they saw a 20-30% drop for whatever temporary reason, I'd probably swoop in and buy a bunch at a discount. I have lots of companies I watch and wait for to see when the price goes on sale enough to get me to buy.

Speculating on the growth of companies that haven't shown the consistent ability to make a profit isn't up my alley, although others do like to do it.

As for "a great cycling stock to scalp", anything that involves attempting to time the market (or stock price) for a quick gain is simply too risky for my investment nature. I personally don't buy any stock I wouldn't be comfortable owning without seeing the price listed for 5-10 years or more. Whether it goes up or down in the next few weeks, months, or even years isn't relevant to my decision making process.

 

[epidural man]

I'd agree that sometimes stock prices (and the market in general) can do that, but I believe that many stocks are priced rationally most of the time. The nice thing about the stock market is that nobody forces me to buy or sell anything, it's merely a price offered for something I can either take or leave. That's what I prefer to purchase stock in companies that are fundamentally sound and profitable and for whatever reason happen to be temporarily mispriced at what I believe is a discount to their actual value. Disney is a company that is going to be around for a long time making a lot of money. I personally believe it's a bit too pricey to buy right now, but if they saw a 20-30% drop for whatever temporary reason, I'd probably swoop in and buy a bunch at a discount. I have lots of companies I watch and wait for to see when the price goes on sale enough to get me to buy.

Speculating on the growth of companies that haven't shown the consistent ability to make a profit isn't up my alley, although others do like to do it.

Sell puts for dividend paying stocks. It is free money.

If you search on Amazon.com for books on options, of the thousands on buying/selling calls, there is maybe 4 on selling puts. I need to write a book.

 

[Mman]

Sell puts for dividend paying stocks. It is free money.

If you search on Amazon.com for books on options, of the thousands on buying/selling calls, there is maybe 4 on selling puts. I need to write a book.

It's not really free money. I mean it's money, but there can be cost and if it's a company I'd really like to own at something near it's current price, I'll just buy it. Then I collect the dividends and the potential long term gains as it's possible the put contract never gets exercised and then all I got was the little up front cash. Conversely if the stock really dropped, I could potentially make more money long term by just buying later when it's fallen quite a bit past what the put sold for.

Selling puts is an investment strategy, but it certainly isn't free money and it isn't risk-free.

 

[epidural man]

It is free money.

Let's say you think buying ABT at $46 is a great deal - in other words, wether the stock drops or not, you are committed to the idea of owning ABT at $46. So you buy 500 shares. $23000. Over 5 months, the stock drops to $44. You have a loss (assuming you sell) of $1000.

Now, say you decided to sell puts on 5 contracts at $2. You can either use ABT stock you purchase at $46, or your MCD dividend paying stock as your collateral. Anyway, that will give you $1000. If the stock does nothing, or rises, or only sinks 1.99 or less, you make $1000 regardless because the puts expire worthless. That is free money. It is time value money that people give you that shrinks to nothing with time. If the stock tanks, you were commited to owning the stock at the higher price anyway, so you haven't loss anything you otherwise weren't committed to.

If that isn't free money....

 

[Mman]

It is free money.

Let's say you think buying ABT at $46 is a great deal - in other words, wether the stock drops or not, you are committed to the idea of owning ABT at $46. So you buy 500 shares. $23000. Over 5 months, the stock drops to $44. You have a loss (assuming you sell) of $1000.

Now, say you decided to sell puts on 5 contracts at $2. You can either use ABT stock you purchase at $46, or your MCD dividend paying stock as your collateral. Anyway, that will give you $1000. If the stock does nothing, or rises, or only sinks 1.99 or less, you make $1000 regardless because the puts expire worthless. That is free money. It is time value money that people give you that shrinks to nothing with time. If the stock tanks, you were commited to owning the stock at the higher price anyway, so you haven't loss anything you otherwise weren't committed to.

If that isn't free money....

It certainly isn't free money. It might be smart money, but not free. Giving me $1000 to sit and wait for a stock to drop isn't free. It obligates me to buy that stock. The stock might never drop and I might not get a chance to buy that stock I wanted. I also don't collect the dividends over that time. It's also possible on a long enough put that company fundamentals might change and I might not longer want to buy at that price and I'm stuck with the contract or selling it. The small gain, to me, isn't enough to make up for the uncertainty.

Now that's my position 98% of the time. I have sold put contracts that I felt were massively mispriced in the past for companies I wanted to buy anyway. But that's pretty rare. When I peruse options prices, not many jump off the page at me.

 

[deleted126335]

selling naked puts is a high risk high reward strategy that works till it doesn't. Lots of people like it because you often "get paid to wait" and frequently get to own a company that you wouldn't mind owning anyway. The problem is that when the risks of this strategy show up it is almost always the worst time- during major market selloffs when there are lots of things that are attractive to buy. Your capital is committed to buying the stock. Opportunity cost. Also the issue of single company risk which is very real. Risk and reward are inexorably intertwined. Just because one is not aware of the risks does't mean that they are not present.

 

[epidural man]

selling naked puts is a high risk high reward strategy that works till it doesn't. Lots of people like it because you often "get paid to wait" and frequently get to own a company that you wouldn't mind owning anyway. The problem is that when the risks of this strategy show up it is almost always the worst time- during major market selloffs when there are lots of things that are attractive to buy. Your capital is committed to buying the stock. Opportunity cost. Also the issue of single company risk which is very real. Risk and reward are inexorably intertwined. Just because one is not aware of the risks does't mean that they are not present.

Explain to me how there is more risk then owning the stock? It is the same risk. If it drops, it drops. That risk exists unless you do a spread where you define the risk. You would have had the risk owning the stock.

 

[epidural man]

Here is another way to think about it. Selling insurance has risk...especially if everyone's home burns down. However, the most profitable companies year after year are insurance companies. We should all make our own insurance company. However, we don't have the capital to do so. But guess what - the stock market lets you be your own insurance company, selling as much as you want and you collect premiums based on your capital amount. That's pretty cool.

although I do suspect there is a reason there are only 4 books on Amazon.

Dr Doze, that is an interesting point about when it goes bad, it is the worst time.

Although you don't have to always buy the stock, you can buy back the put.

 

[Mman]

Explain to me how there is more risk then owning the stock? It is the same risk. If it drops, it drops. That risk exists unless you do a spread where you define the risk. You would have had the risk owning the stock.

The risk is similar, but different, from owning the stock outright on day 1. It's also important to remember that the money you make on selling the put is taxed as ordinary income (aka a lot for high earners) which significantly cuts into the profit potential.

 

[deleted126335]

Here is another way to think about it. Selling insurance has risk...especially if everyone's home burns down. However, the most profitable companies year after year are insurance companies. We should all make our own insurance company. However, we don't have the capital to do so. But guess what - the stock market lets you be your own insurance company, selling as much as you want and you collect premiums based on your capital amount. That's pretty cool.

although I do suspect there is a reason there are only 4 books on Amazon.

Dr Doze, that is an interesting point about when it goes bad, it is the worst time.

Although you don't have to always buy the stock, you can buy back the put.

Selling naked puts is a good strategy in a flat market. You get to keep the option premium. We discussed how this is a suboptimal strategy in a falling market. Since an investor who sells a put doesn't know if the market will rise, fall, or stay flat, she has to keep adequate reserves to be able to buy back the put or the stock, she loses out by not being fully invested if the market rises. Again, Opportunity cost.
Many strategies that existed for a long time (free lunches) were arbitraged away once academic finance shed a light on them- e.g. Monday effect, January effect, Dogs of the Dow.

Not saying that one can't make money on selling naked puts. I am saying that you are not getting the maximum amount of return for every bit of risk that you are taking. I am saying that this strategy is suboptimal.

 

[epidural man]

Bought PCRX today at $90, sold at $93...perfect scalp.

I agree, it isn't wise - but as that article dr doze linked pointed out - it was fun.

 

[Mman]

Bought PCRX today at $90, sold at $93...perfect scalp.

I agree, it isn't wise - but as that article dr doze linked pointed out - it was fun.

LOL. Rollercoasters go down as often as they go up. It's just that the tax man takes away half of the up when it breaks your way and the broker takes a fee off the buy and the sell.

 

[deleted126335]

Bought PCRX today at $90, sold at $93...perfect scalp.

I agree, it isn't wise - but as that article dr doze linked pointed out - it was fun.

"Money won is twice as sweet as money earned."
-Paul Newman in the Color of Money.

 

[sevoflurane]

Exparel is just too volatile. If you got in when it was 35... your day in the sunshine has already passed.

Sold Alibaba at $112.