Sell Emergent BioSolutions Calls for 39% Two Month Gain

By Linda McDonough • February 16, 2018

Sell to close the March 16, 2018 call on Emergent BioSolutions (NSDQ: EBS) with a strike price of $50 at $2.50 or higher for a 39% gain. Symbol (EBS180316C50)

Emergent has been zig-zagging with the market. I like the stock but recommend booking this solid gain in 2 months time.

These options are not terribly liquid, so place your offer at the midpoint between the bid and ask for the best price. I do not foresee any bad news, so if you don’t get filled today I expect you will be able to next week.

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Roger Dehring

02/16/18 ‐ 3:27pm ET February 16, 2018 at 3:27pm ET

Thanks for the heads up, Linda,

When I did the trade, did MAR 50/55 calls. Closed half a few weeks ago. Just closed the remaining contracts. Paid $1.24 going in. Got $1.85 for the half I closed earlier and $1.51 today. That’s an average of $1.68, or $0.44 profit before commissions. Expect that’s pretty close to the 39% you show.

Thanks for another winner!

Karl

02/23/18 ‐ 11:47am ET February 23, 2018 at 11:47am ET

I waited as recommend but today the stock dropped again and now i have a loss of 63% with EBS. Shall i wait longer or take the loss now?

Linda McDonough

02/23/18 ‐ 12:26pm ET February 23, 2018 at 12:26pm ET

Karl,
As a publisher, I am prohibited from giving personalized advice. However, my thought earlier that I believe those that were not able to sell the calls on Feb. 16th stands. The company reported a mixed quarter today but all of the issues are due to a timing shift of a large order, which does not indicate a deeper demand issue.
Best,
Linda

Linda McDonough

03/09/18 ‐ 1:32pm ET March 9, 2018 at 1:32pm ET

Subscribers-
Anyone who still owns these March 50 calls might think about selling them today. They are trading about $2.10, lower than my mid-February sale price but still 17% higher than the recommended purchase price. They expire on March 16 so if you still own them and the stock is above $50, you will be assigned the number of shares that correspond to your option position. You will need to put up the capital to pay for the shares but then you can sell the shares right away if you want to book the gain that way.
Best,
Linda

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Linda McDonough

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Linda McDonough is a veteran hedge fund analyst who loves to break down company financial statements and identify market inefficiencies to uncover big opportunities. She believes in a boots-on-the-ground approach that includes surveying customers, interviewing company executives, or doing whatever it takes to see what others don't.

She's now brought her experience as a hedge fund analyst to subscribers of her Profit Catalyst Alert service. Her system identifies small- and mid-cap stocks that are about to move due to catalytic events that few others can identify...until it's too late. These events often times result in massive gains for her followers.