MYOV and the protective put

MYOV and the protective put

Team,

 

I wanted to post another type of trade that I do often in a longer term holding account. I did not alert this trade to you but spoke about it briefly in chat today. I do not recommend this trade for everyone.

 

Today MYOV cleared stage 3 of their their prostate cancer drug. Not only did they clear stage 3, but they had a 97% success rate. That's absolutely huge and I want to be apart of it.

 

"Shares of Myovant Sciences (MYOV) surged in early trading on Tuesday after the biopharmaceutical company said a phase 3 trial of relugolix, a treatment for advanced prostate cancer, attained its primary endpoint.

Almost 97% of patients treated with once-daily, oral relugolix achieved sustained testosterone suppression, the company said. The drug also demonstrated superiority to the standard leuprolide acetate treatment in five key secondary endpoints, it added.

Findings from the late-stage study will support a new drug application submission to the Food and Drug Administration in Q2 of next year and future regulatory submissions in Europe and Japan, Myovant said"

 

Today I bought 600 shares of MYOV at $13.66 and at the same time bought 6 contracts of the January 2020 $12.50 puts @ 2.75.

 

What this does is give me a $15.25 break even so anything over $15.25 is complete profit. That's assuming I don't close these puts out if MYOV makes a break for it again. What this also does is cap my loss at $1.16 per share. How? Because if the stock is trading under $12.50 I can call my broker and exercise these puts. That will sell my stock at $12.50 even if MYOV is trading at $1 or no matter the current cost.

I will add another 600 shares to this trade if it continue to drop.  If I can get them near $10 I will start buying the $10 puts as well.  

This is very similar to the SPCE trade that I only reccomend taking a trade like this if you have protective puts as well. Who knows if this could dump after such a large day again so I am taking this but I will sleep well at night knowing I am fully protected.

 

The idea behind this trade is to allow MYOV to potentially make a large move up on this news.  I would be looking for $20-$25 while being fully protected on the downside of this.  I'll hold this for a few months, or until I hit my target.