Best Stock on the Market

Put Options on DEPO on 8/11/2017

Bearish Flag on DEPODepomed, Inc. (DEPO) is a specialty pharmaceutical company. The firm develops products for pain and other conditions, and diseases of the central nervous system in the United States.

It offers Gralise (gabapentin), an once-daily product for the management of postherpetic neuralgia; Zipsor (diclofenac potassium) liquid filled capsule, a non-steroidal anti-inflammatory drug for the treatment of mild to moderate acute pain in adults; CAMBIA (diclofenac potassium for oral solution), a non-steroidal anti-inflammatory drug indicated for acute treatment of migraine attacks in adults; and Lazanda (fentanyl) Nasal Spray, an intranasal fentanyl drug used to manage breakthrough pain in adults.

The company is also involved in the clinical development of DM-1992 that completed a Phase II trial for Parkinson's disease.

Depomed, Inc. sells its Gralise products to wholesalers and retail pharmacies. Depomed reported second quarter earnings per share of 8c, which was below consensus of 9c, and announced revenue of $100M for the quarter, beating the expected $99.42M. The company also said it sees 2017 revenue of $400M-$415M, compared to consensus of $418M and the company’s prior view of $410M-$430M issued in May. 

On June 8, Depomed and Insys Therapeutics (INSY) were under pressure after the Food and Drug Administration requested that Endo Pharmaceuticals (ENDP) remove its opioid pain medication, reformulated Opana ER, from the market. After careful consideration, the agency is seeking removal based on its concern that the benefits of the drug may no longer outweigh its risks, the FDA stated. This was the first time the agency has taken steps to remove a currently marketed opioid pain medication from sale due to the public health consequences of abuse.

Shares have formed a bearish"flag" and lower share prices are expected for the stock. 

52-Week Trading Range: $5.95 - $27.02

Entry Point: $6.35

Trade

  • Buy 1 September $6.00 Put at $0.40
  • For a net debit of $0.40

Profit/Loss Analysis

  • Breakeven at $5.60
  • Maximum profit is unbounded
  • Maximum loss is ($40.00) at strike of $6.00

Closing Summary

  • Sold 1 September $6.00 Put at $0.00

Position closed on 9/15/2017 at price of $0.00 with a -100.00% loss in 35 days.

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