Vivus Inc
Ticker: VVUS
On July 15th the FDA Panel will be reviewing the weight loss drug made by Vivus.
If the panel gives a positive review of the drug then the stock can jump 50%, if they give the weight loss drug a negative review then the stock can drop 50%. Basically we are talking about VVUS being eiter $5 of $15 on July 16th.
The Volatility of the options are 266%.
The option trade that I am considering is a covered call. (ie. buy the stock, sell the call option)
If we buy the stock at the time of writing this article, for $9.72 and we sell the $7 call for $4, that give me a break even if the stock falls to $5.72. If the stock stays above $7 through option expiration, that means it would have to drop almost 30%, we stand to gain 20%.
Basically it is a risk of losing 10% and a potential reward of gaining 20% in 2 and a half weeks.
The reason we say it is a risk of losing 10% is because the options are looking for a move to $5 of $15. Usually the market makers are accurate and if it does drop, it will only drop to the amount of the at the money strangle.
We plan on buying a covered call position before July 15th, between $5.50 & $5.70.
We currently hold no position in VVUS.
Article originally published July 2010.
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I ended up buying the stock for $9.05 and selling the July 6 Call for $4.00 leaving my a net cost of $5.05.
See you on yahoo, Very nice site with some intresting news, I must admit i did buy the $6.00 Puts yesterday, because if this gets rejected it will get hit hard. I think too many people think its going to get the FDA go ahead seen it many times before andy problems with the drug and its good bye VVUS. Only 2 out of 8 companys ever make it though FDA i say the odds are in our favour.
Good luck long or short.
Mike
Just covered the $6 July call at $0.05 and sold the July $5 for $0.20. We shall see where the stock closes today.
Hi i hope you made some good money not sure what your buy price was. I sold on friday @ $1.05 paid $0.55 did not make as much as i thought but i guess a grand is a grand. I think this will just sink now until some news come out. Good luck and a great board thanks
Your welcome to come over to our blog and have a post 
A grand is a grand mike! Congrats!
I ended up making a couple bucks on the trade. Nothing special but what really made me happy was the perfect market maker manipulation.
The fact that the stock wouldn’t go below $5 was such a pretty site.
Now it will waste away like all the other pharma stocks until the next FDA decision.
Time to find the next good trade!
VIVUS, Inc. is a biopharmaceutical company engaged in the development and commercialization of therapeutic products for large underserved markets. Its investigational drugs currently under development could serve the obesity, diabetes and sexual health markets. The company’s current and investigational drug candidates in development encompass patented proprietary formulations and novel delivery systems. It has one FDA approved drug and several investigational drug candidates in late stages of clinical development. The current investigational drug pipeline includes three late-stage clinical drug candidates, each addressing specific components of the obesity, diabetes and sexual health markets. One of these investigational products, Qnexa(TM), is in Phase 3 clinical trials for obesity and has completed a Phase 2 clinical trial for diabetes. Another of the company’s investigational drug candidates, avanafil, is in Phase 3 trials for erectile dysfunction. The company’s late-stage investigational drug candidate pipeline includes: Qnexa, being developed to treat obesity, for which two of the Phase 3 studies are ongoing and one Phase 3 study has been completed Qnexa, being developed to treat diabetes, for which a one-year Phase 2 study has been completed Avanafil, being developed to treat erectile dysfunction, for which Phase 3 studies are ongoing and Luramist(TM) being developed to treat hypoactive sexual desire disorder in women, for which a Phase 2 study has been completed. It markets MUSE as a prescription product for the treatment of erectile dysfunction. The company owns its manufacturing facility located in Lakewood, New Jersey, which is mainly used for formulation, filling, packaging, analytical laboratories, storage, distribution and administrative offices.