Options trading in Visicu, Inc. (EICU) on Friday, June 8th (as June 10 Calls open interest was cut in half to a level of around 5,600 contracts with approximately 2,600 contracts rolled over in a paired trade to the July 10 Calls) suggests that the US Patent & Trademark Office final patent rulings may take longer than I originally expected.
While I'm still bullish on EICU and own shares, the timing is uncertain on the second re-examination final ruling and the new patent that is pending as of April 20, according to the CEO at an investor conference on May 2. I would not recommend investing in this stock with options only, as it only recently started trading options and there is insufficient volume and liquidity to make it a feasible alternative to the common stock. Investors in Visicu could consider writing covered calls as a hedge on the uncertain timing of the patent rulings for about a 10% return now on the July 10 calls based on closing prices Monday, June 10, or just own the stock and wait.
The company has recently reported encouraging operating results and has expanded its leadership ranks with the appointment of a chief nursing executive for clinical activities. With about $4 per share in cash, no debt, and an innovative, profitable business model, the stock is poised to recoup some of the share price losses from its debut of just over one year ago for investors willing to wait for future positive developments on multiple fronts.
Disclosure: Author has a long position in EICU
EICU 1-yr chart