Sunday, June 13th Weekly Portfolio Update and Trading Ideas

Portfolio Update:
June 14th: $49,077.35
June 7th: $49,766.50
June 1st: $48,081.00

Currently, I have $2,827.21 in my options account and $46,250.14 in my stock account. My June calls for JAZZ are nearly worthless, as are my ARNA September calls. While I'm hopeful ARNA options will recover, I think I'll end up sitting on a loss from the JAZZ calls. My $5 June QCOR puts are down, my $5 July QCOR puts are up. My $10 July QCOR puts are b/e.

I have a weekly loss of about $700. I originally had a sell order for all my JSDA at 1.55 and then thought it'd keep dropping so only sold 1/3 a week ago. While I have a nice gain from that 1/3, and am still green on the 2/3 I own (avg SP 1.996), I played this one poorly from a ST gains perspective. I didn't anticipate the support it's found over the last week. Had I sold half or or all at 1.55, I could've reshorted it when it spiked again this week or moved on and traded another stock.

June 7th-June 11th Trades
I exited my two LT positions (BIOD, ARNA) on pops this week, tho I still took losses on both, in this account to have cash free, and will likely reenter them later. I hate to take a loss, but I hate having cash tied up unnecesarily more. If my original hypothesis is correct and these stocks go back up between now and October, I can always reenter. I made trades in QCOR, IMA and PPCO this week. For QCOR I went short and bought QCOR July $10 puts. I'd hoped to short $DCTH and $OXGN but couldn't find shares to short Monday when I looked for them. I thought about shorting RPRX on the news their clinical trial was lifted but shorting stocks that inexspensive tie up considerable money in that I have to hold a $2.50 in cash for every share of sub $1 stock I short. I decided to keep cash free for QCOR. I took a $300 bath on impatience in the IMA trade, and broke even on a PPCO trade. Overall, I felt off my game this week so decided it was better to stay on the sidelines than to frustrate myself trading if my gut was off and my time limited.

Current $QCOR positions:
Short shares $10.12 (Thursday)
June $5 puts (holding)
July $5 puts (holding)
July $10 puts (added Friday)

Some Lessons I've learned regarding options:
1. Keep options expiry relative to catalyst date in mind when purchasing. Given that QCOR news wasn't due until 6/11, and options expiration is 6/17, I think I cut it too close buyign June options.
2. Go for quality, not quantity. The price for the $5 puts was compelling and seemed like an easy doubly given they only had to go up 10-15 cents from my purchase price for that double to happen. However, $5 is a far cry from the current SP, even after the news Friday, so I'll be curious to see how the put price is affected next week- if I'm able to turn a profit, b/e, or even get out of the June options.
3. TAKE THE PROFITS when I can. I could've sold JAZZ for a profit early on but ended up holding through the correction.
4. Be willing to trade quickly with options. As I said, I need to take profit when i can. I'm trying to find how to balance LT vs. ST options in my account, and what the LT return is when buying options a few months out from catalyst dates.

My thoughts on QCOR:
I think the QCOR delay is a formality. This drug has been used off label for decades for infantile spasms and I don't see why it wouldn't be approved formally for that use in September. Yes, there is a limited data sampling but that's in part due to the fact that the market for this indication is relatively small (no pun intended:) and it's difficult to get mass data to support the benefits of the drug. That said, only one drug is currently approved for IS, Vigabatrin, which was approved in August, 2009 (thank you to the Anonymous comment poster:) on my blog as I'd read differently). I am hoping for a retrace to the 8s, tho think this may be overly optimistic, and will look to cover my short as well as investment opportunities for another approval run into September. I will watch September calls closely, and likely invest in the possible catalyst pop that way instead of buying stock, given the price of QCOR. I think QCOR is a biopharmaceutical with a strong balance sheet and Athcar sales are growing significantly for use with MS patients. In my opionion, that is where the money will be made with Acthar, not infantile spasms. The cost for IS treatment with Acthar is very expensive ($100,000 for a year of treatment), so I don't know that much more revenue will be generated by IS patients with this approval. However, the FDA approval has brought attention and speculators to the stock, so perhaps we can benefit from that. When the dust of traders moving on after final word from the FDA settles in September, 2010, I think we could see a significant retrace of the stock even with strong MS sales given the attention and SP increase it's seen the last few months. Some more QCOR information:
Questcor Website
Acthar Delay PR
QCOR 1st Quarter Report
Acthar and MS
Acthar Cost for Children with IS- $100,000 annually

Trade Playlist updates for June 14th-June 18th, 2010
I may be traveling this week to check out schools and real estate out of state where we may be relocating, so I am not taking on a lot this week. For this week, my potential playlist is: QCOR and JSDA. Yes, verrrry boring, I know, but there we are. I still think JSDA will retrace, tho I'll be looking to lock in profits and move on if it doesn't go the direction I'd like this week. I'm very curious to see how QCOR plays out. Of course I'll be looking for other possible trades, but need to be cognizant of time/attention limitations I may have this week.