Lenny Re Revisited

Well now he's a hero - he escaped this time - AMGN gapped up this morning and now the calls he is long are worth 8.60 and he is 10.5K to the good on his trade. Wow! Hard way to make a buck.

Good Trading Lenny! Can't wait to follow you on your next suicide mission. Hope it comes out as well.

Revisiting Lenny

As usual the blogosphere is on something for a minute then on to something else with no follow-up and I'm just as guilty as everyone else in that regard. So I was thinking yesterday - I wonder how Jimmy Crack Corn Pone's protege Lenny Dykstra is doing with his AMGN deep in the money July 55 calls play now that AMGN looks like this -


Looks to me that Lenny is doing just fine and is having the last laugh on all of us - but wait - let's review the bidding.

He bought 80 contracts at a variety of prices and I could work out the basis for you but I prefer the contract by contract method to present the data - When he first began this play the deep in the money calls were at 12.70 - as of yesterday's close they are 6.90.

Here is a chart that shows the entire play from beginning to the present -


P per S is the price per share he bought at each increment. #C is the number of contracts purchased. Curr P is the current price of the option and Delta is the difference between current price and P per S. The rest is just multiplying out to get to a real value and we find that he is only 3.1K in the hole at the moment. He may even get through this without a scratch thereby proving his point - which is? You can save a bundle of money by avoiding his picks.

Here's the way it shapes up on my pivot point model -


Note that the place where Lenny bought the calls was stupid and if he had bought them at point "a" some nifty things could have happened - 1. He would have had a lower basis, 2. He would be buying on the ascendant trend vice the descendant trend, and, 3. He probably would have already made his buck profit and would have been out because point "a" was 4 bucks ago.

There is nothing inherently wrong with buying deep in the money calls - as long as you buy them on stocks that are going up and not down. Using a double up approach when the stock is declining is just stupid. If the stock is descending why not buy deep in the money puts - same basic principle just a different direction.

This Isn't Stupid

It's moronic!

I don't know how many of you have been following the Lenny Dykstra AMGN saga over on Adam's Daily Options site but it is both hilarious and actually something I would expect to see related to Jimmy Crack Corn Pone. Go take a look and hurry back - I have to add my two cents.

Today's chapter has one of the Real Money boys, Dan Fitz saying

On March 16, he noted that the decline in the stock was unexpected, but equated it to batting averages. He also urged to look at the true value of a company, not its most recent performance.

Now I had to go see this stock for myself and here it is -



And Lenny has 58 large in this play. Now I don't really give a crap how much Lenny Dykstra has in the game or how many loyal followers he has as deeply involved as he is - what I want to know is - what did anyone see in this stock since, oh say the middle of January, that would convince anyone to put that much money into it? And once in - why continue to double down?

And just for the record the July 55 calls are now worth about 46K so he's down 12 large. And there is no guarantee that this pile of steaming dung won't resume the fall on Monday. Earnings are on the 19th and that means a week to get back a lot of money and that isn't going to happen. I hope he gets a good number.

AMGN Alert

Notable Calls this morning reports on AMGN and says that the recent sell-off related to a bad investigation was not necessary. Apparently a couple of firms are out in defense of AMGN and from my point of view which is strictly TA it appears to be forming a BOB on the weekly charts.



I don't like biocrappa in general but AMGN has been around forever and it appears to me that there might be some recovery coming. Of course you will need a confirmation (the third candle) so this is just a heads-up.

If you like the biopharma then I'd keep an eye on it and if a turn around comes you might want to get on board. It may be the last time you get this stock at this level.