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Monday, December 7, 2009

ACAD trade

Acadia Pharmaceuticals showed up on the account's Optionsxpress screener after the account finished its trade with Human Genome Services Inc. back in July of 2009. The company showed the very same traits as the HGSI trade. So the account ended up buying 100 shares at $2.34 and then selling the September 2009 $2.50 calls for $0.55. After commissions, the revenue from the call was $40.00.

At first the stock went all the way up past $5.00 per share. But then the news of a drug trial did not go well. This sent the shares down around $2.00. The call expired worthless.

There was a re-evaluation of the stock to see if the account should sell or hold on to the stock and sell another call. The decision was made to keep the stock and sell the November $2.50 call for revenue of $5.00. This brought total revenue of the trade to $45.00.

This did not go well. The stock fell all the way to $1.40 before the call expired. The account eventually sold the stock after the call expired.

The total loss on the trade including commissions of 37%.

Trading Notes on the trade will be coming soon.

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