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  • MannKind Trivia: Who Likes Word Problems? 13 comments
    Feb 23, 2013 4:33 AM | about stocks: MNKD

    We are on record calling MannKind (NASDAQ:MNKD) "our favorite speculation in the market" and suggesting it could be a 100-bagger.

    So let's learn about below-the-radar investing opportunities with MannKind with a pop quiz word problem that will require research, math, and no-loafing.

    Have a look at Friday's January 2015 options chain, somebody bought some more $5 calls for 64 cents:

    (click to enlarge)

    Let's assume the trader is aware of all the publicly traded financial instruments for MannKind, and that this position will be held until expiration.

    Here is the question:

    At what price does MannKind have to trade in January 2015 for the trader to have made the best trade possible?

    Disclosure: I am long MNKD.

    Themes: Diabetes, Biopharma, Insulin, Afrezza Stocks: MNKD
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Comments (13)
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  • lidopete
    , contributor
    Comments (15) | Send Message
     
    5.64 and convert to common to cap gains clock, waiting for the 100 bagger!!
    23 Feb 2013, 05:24 AM Reply Like
  • sheldond
    , contributor
    Comments (1137) | Send Message
     
    Did you say 100 bagger!!!!! I'm sure I would have significantly trimmed by then. In my wildest dreams I have imagined a 30 bagger but my calculator only goes so high.

     

    If I really knew options I would be in. I am long the stock and have traded to accumulate more but am almost in the just hold phase.
    23 Feb 2013, 11:20 AM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » Here is a hint: Friday's volume was 2,000.
    23 Feb 2013, 08:03 PM Reply Like
  • Valueplay98
    , contributor
    Comments (584) | Send Message
     
    Could have been a call spread ~
    25 Feb 2013, 04:41 PM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » Maybe, there's no options trading above $5...and this is a little different..a lot of volume today: 24,470..
    25 Feb 2013, 04:45 PM Reply Like
  • colombiano1111
    , contributor
    Comments (8) | Send Message
     
    So whats the answer??
    25 Feb 2013, 06:27 PM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » I gave two good hints!!
    25 Feb 2013, 07:06 PM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » Email me and I'll tell you..
    25 Feb 2013, 07:07 PM Reply Like
  • haveasake
    , contributor
    Comments (2) | Send Message
     
    I must be missing something, because you state these are bought calls, and therefore a long position. What defines a "best" trade? As long as the calls are above $5 at expiration they are in the money, $5.64 is breakeven, but the pps could also be much higher. Theoretically there is no limit, so how do you call one price better than another? Unless the first poster is correct and you are referring to tax consequences, which may well be different then they are now. I'll say a pps of infinity is the best trade price at exp; of course whatever the tax percentage is, applied to infinity is also infinity, but that will still leave me with infinity left over.
    28 Feb 2013, 06:55 AM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » More like if you had $10,000 to invest and hold in MNKD until January 2015, there is a price MannKind can trade for that makes the $5 call the best thing you could have done with your money, what is that price?
    28 Feb 2013, 11:10 AM Reply Like
  • haveasake
    , contributor
    Comments (2) | Send Message
     
    OK, I see what you mean. With MNKD at $2.62 and the Jan15 5C at $.65, I come up with $6.66. Anything higher and the call increasingly outperforms due to the leverage effect.
    Interesting, hadn't thought about it that way before.
    4 Mar 2013, 07:29 AM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » You got it...but there is still another security that pushes that $6.66 much higher. If you email me I'll tell you.
    4 Mar 2013, 11:43 AM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » The alternate security is up 11.76% today..
    28 Feb 2013, 03:18 PM Reply Like
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