Buy Allergan Puts as Botox Meets Competition
The Trade:
Buy to open the November 16, 2018 put on Allergan (NYSE: AGN) with a strike price of $185 at $6.50 or lower. Symbol (AGN181116P185)
Rationale:
Allergan hit a home run with its 2010 approval for Botox in migraine treatments.
Botox accounts for 21% of sales and is Allergan’s fastest growing drug franchise. Botox is used for both cosmetic use and therapeutic use for migraine prevention.
Therapeutic Botox (for the migraine indication) now makes up ¾ of Botox sales and is growing several hundred basis points faster than cosmetic (grew 16% vs. 11% for cosmetic Botox). To date, Botox has had little competition in the therapeutic market.
That is changing rapidly. I expect Allergan to report a slowdown in Botox sales when it reports earnings in late October.
A recent approval and launch of a more convenient migraine drug by Amgen (NSDQ: AMGN) should put a dent in Allergan’s Botox sales.
In addition, Teva (NSDQ: TEVA) just announced this morning the FDA’s approval of its AJOVY injection for the preventive treatment of migraines in adults.
Allergan hosted an investor event on Friday to discuss its portfolio of cosmetic drugs, which failed to impress investors. I was unsure how this meeting would be received so waited until today to post the trade. This means the stock is down but does remove one element of upside risk in the stock.
Stock Talk
Linda McDonough
Hello all,
I realize the Allergan puts are trading above my suggested limit currently. I suggest being patient. The company does not report earnings until late October so we have some time. The stock is likely weak today due to the Teva news, which was not entirely expected.
Best,
Linda
You must be logged in to post to Stock Talk
George McMillion
Thanks for comments, patience will pay off most of the time.
You must be logged in to post to Stock Talk
Linda McDonough
Please note that AGN is trading up some today and the puts are trading close to my suggested price.
You must be logged in to post to Stock Talk
Joseph Lipari
just filled….thanks
You must be logged in to post to Stock Talk
Jeff L.
AGN filled $6.50 on TOS thanks Linda
You must be logged in to post to Stock Talk
Paul
Filled at $6.50 on Fidelity. Thanks Linda.
You must be logged in to post to Stock Talk
Tim Lewis
Filled at $6.20 on Fidelity.
You must be logged in to post to Stock Talk
MarkS
Filled at $6.34 on IB at 12:06pm ET
You must be logged in to post to Stock Talk
RJ
AGN filled @ $6.50
You must be logged in to post to Stock Talk
Abhi A
Filled at 5
You must be logged in to post to Stock Talk
Pat C.
Filled at $3.88
You must be logged in to post to Stock Talk
Todd Harrell
filled at $5.30
You must be logged in to post to Stock Talk
Pat C.
Sold yesterday at $4.32 for 11% gain. Thanks for the idea.
You must be logged in to post to Stock Talk
David Luck
Hi, I’m new to PCA and the forum. I bought 10 AGN Nov 185 Puts @$5.30 and 10 NXPI Nov 90 Calls @$3.05 on September 25th. I’m down over 20%. Was I foolish? Should I get out now? As I understand it, the decay rate on options is pretty fast w/in 60 days.
You must be logged in to post to Stock Talk
Ian
Hi Linda,
do you feel AGN will continue down trend or perhaps today is a good opportunity to take the profits.
You must be logged in to post to Stock Talk
Stuart Housden
Took advantage of the overall pullback today to exit this position profitably – sold my puts for $7.56 (did the same with the TAP puts: $2.70)
Phil L.
Stuart,
You were not alone. Took a partial on the AGN’s I bought the 190’s and exited with 85% profit. Held onto the rest. If it swings back we may get a second bite
Phil
You must be logged in to post to Stock Talk
You must be logged in to post to Stock Talk
ETKTRIDE
AGN – Also took advantage of the pullback today to exit this position – sold my puts for $9.15 (99.56% ROI in 2 days)
Thanks Linda!
You must be logged in to post to Stock Talk
Add New Comments
You must be logged in to post to Stock Talk