Biotech Option Plays too good to be true? via /r/wallstreetbets #stocks #wallstreetbets #investing


Biotech Option Plays too good to be true?

I think im just having an autistic moment here but after thorough DD im trying to see whats wrong with a potential strategy. So everyone knows biotech companies have very binary performance (especially newer smaller companies that are based off one products success or failure) and that 90% roughly of all start up biotech companies will fail trying to bring a product to market. My idea is as follows: you have a 100k portfolio and you divide it into 10 biotech plays by buying weekly deep otm puts for dirt cheap on the week of a clinical trial results (yes i know they have a premium during this time but that shouldnt matter at all) you should win roughly 9 times out of 10. And when you win you should win very big. Side notes: 1) I wanted to add is I understand you could have a losing streak on a few but if the rule of thumb is 90% fail then that shouldnt deviate to drastically over a long period of time.

2) I would like to say that I have tried this at first with a paper account then with real money and have had success with the small amount of losses being half attributed to me not know what clinical trial phases were most important but I want to see everyone’s opinion on if im just lucky or if this could be a viable strategy.

Submitted August 31, 2022 at 01:47AM by Ok-Project6139
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