Bought to close AGIO June 17 expiration $55 strike calls
Bought 2 contracts of AGIO June 17 55 strike calls at $1.10. This closes the short position originally entered on 5/25/16 at $2.65. Total return less commission was $291.10. Return per share after commission was $1.4555.
Agios presented promising Phase 2 data over the weekend and was upgraded to BUY with PT of $90 at Canaccord Genuity. The stock was also upgraded to a “buy” rating at JP Morgan, while Goldman Sachs and Janney Montgomery Scott maintain their neutral stance. Still, AGIO struggled against the bearish tape, giving me the opportunity to profitably close the short call position, which I had held against long stock.
I considered remaining short the calls, but given the positive data and AGIO’s volatility, I didn’t want to risk the stock running up through the strike price. The likelihood of AGIO appreciating 5.8% to $55 within 4 days time is only about 25%, but I have a bullish bias on the stock. I will look to re-establish a short call position with July expiration, preferably with a higher strike, after the stock appreciates from the current level.