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Put Options on TEVA on 10/17/2016

Bearish Flag on TEVATeva Pharmaceutical Industries Limited (TEVA) develops, manufactures, markets, and distributes generic medicines and a portfolio of specialty medicines worldwide.

The company’s Generic Medicines segment offers generic medicines, such as sterile products, hormones, narcotics, high-potency drugs, and cytotoxic substances in various dosage forms, including tablets, capsules, injectables, inhalants, liquids, ointments, and creams. This segment also develops, manufactures, and sells active pharmaceutical ingredients. The company’s Specialty Medicines segment provides branded specialty medicines for use in central nervous system and respiratory indications, as well as the women’s health, oncology, and other specialty businesses.

Its products in the central nervous system area comprise Copaxone for multiple sclerosis; Azilect for the treatment of Parkinson’s disease; Nuvigil for the treatment of excessive sleepiness associated with narcolepsy and certain other disorders; Fentora/Effentora for the treatment of breakthrough pain in opioid-tolerant adult patients with cancer; and Zecuity, a prescription transdermal system for the acute treatment of migraine with or without aura in adults. This segment’s products in the respiratory market include ProAir, ProAir Respiclick, QVAR, and Duoresp Spiromax for the treatment of asthma and chronic obstructive pulmonary disease, as well as Treanda, Granix, Trisenox, Synribo, Lonquex, Myocet, Eporatio, Tevagrastim/Ratiograstim, and Trisenox products in the oncology market. This segment also offers a portfolio of products in the women’s health category, which includes ParaGard, Plan B One-Step, OTC/Rx, Zoely, Seasonique, and Ovaleap, as well as other products.

Shares have formed a bearish "flag" following several disappointing news for the firm. This morning, the company announced that that the Committee for Medicinal Products for Human Use, or CHMP, of the European Medicines Agency, or EMA, has adopted a positive opinion recommending an indication extension of Trisenox. The indication extension is for use in newly diagnosed low to intermediate risk Acute Promyelocytic Leukemia in combination with retinoic acid. Trisenox, in combination with retinoic acid, has shown a very high overall survival rate with almost no relapses after more than four years of median follow-up. This should move the stock higher, offering a better buying opportunity for the puts on the stock. We expect lower share prices for this stock.

 

We will be trading November 11th Options

 

52-weeks Trading Range: $42.95 - $66.55

Last Trade: $44.50

 

Trade

  • Buy 1 November $44.00 Put at $1.65
  • For a net debit of $1.65

Profit/Loss Analysis

  • Breakeven at $42.35
  • Maximum profit is unbounded
  • Maximum loss is ($165.00) at strike of $44.00

Closing Summary

  • Sold 1 November $44.00 Put at $2.30

Position closed on 10/28/2016 at price of $2.30 with a 39.39% gain in 11 days.

Updates

10/28/2016 12:04:54 PM

TEVA $44 Put sold for $2.30

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