Biotech stocks have been hit hard all year, and especially in the last two Months – I might be early to this trade, but Celgene popped up on my stock screens last week – and it is getting hit hard again today.
I sold options on Celgene Corp (CELG) – here are the details of the trade:
- Sold: 5 Jan 18, 2019 Puts
- Strike Price: $65.00
- *Premium Collected: $750.00
If I am forced to buy the 500 shares, my entry price will be $63.50 per share – almost a 45% discount to Celgene’s Morningstar Fair Value of $116.00 per share – providing a large Margin of Safety. Celgene does not pay a dividend, so this is quite a departure for me – but, given their extensive pipeline of new drugs coming online in 2019 and 2020, I feel the shares are too undervalued to ignore.
*Excludes transaction costs.
Extra: saw this cartoon yesterday – had a good chuckle:
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