Bulls and Bears Prosper…and Pigs Go To Slaughter

On the heels of Elon Musk announcing that he may take TSLA private, a report surfaced today about the same possibility with Celgene (CELG).  An analyst at RBC suggested that this move could “better capture the medium-term value of…” and he raised his target price in the stock to $110.

Why do we care?  Well, in the Option Volatility Signal Room our students have a bullish call spread position.  On July 31st a signal was sent to buy the August 31st expiration, 92.5/95 call spread for $0.65 or less.  So how do we manage this position and this news?

The stock “popped” on this news from $90.20 – $91.65 after the news was announced and our spread appreciated considerably.  

Remember, we are traders not investors.  As I always say, “Bulls and bears PROSPER, pigs go to the slaughter.”  We sent a signal to exit half of the existing position at $1.10, representing a 70% gain.  If our students fill this exit order, we will then manage the remaining half of the position.

Once again, successful trading is all about Risk Management and this is our utmost priority here at PTA.

Follow me on Twitter:  @cboesib

Scott Bauer
Scott Bauer
A respected market commentator seen on Bloomberg, Fox Business, CNBC and other major financial networks, Scott Bauer has 25 plus years of professional equity and index options experience at the Chicago Board Options Exchange (CBOE) and Chicago Mercantile Exchange (CME) and as a Vice-President/trader for Goldman Sachs. Scott graduated with Honors from the University of Illinois Business School and has taught classes both at his alma mater and at the CBOE.