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Biotech Trading Verses Investing 101

Posted on the 10 October 2011 by Phil's Stock World @philstockworld

Biotechs are the life-blood of the pharmaceutical industry.  These small companies take risks that many larger pharmaceutical organizations would not usually make (scientists call it bureaucracy).  With those risks comes a high failure rate, and therefore investing in biotechs is not for the faint of heart.

There are many investment house boutiques that offer input on biotech investing.  I recently noticed that several writers at SeekingAlpha have combined their writing powers and started a biotech investing page (and even Adam Feuerstein gave them a plug).  It’s not that I find other authors wrong with their analysis, as many are quite good.  What I find hard to swallow is the amount of money one can spend on buying a single service (as an example) for just investing in biotechs, instead of being apart of an investing community at PSW.  Not only is there a biotech component, but many other trading strategies are present for a longer term portfolio that uses options and hedging strategies.  Also, at PSW, Phil, Opt and many others are here almost every day to answer questions (we are not Tweeting yet!).  Am I tooting a horn here at PSW, as I find it a very good investing community, where many different walks of life come together and share their experiences, but I digress.

We are coming to the end of the year, with three months left, and lots of holidays to make our way through.  Many of our biotechs have done little to nothing the past few months.  In our talks in Las Vegas the past few days, discussions were centered around investing and some trading (it is really called gambling, no?).  Some biotechs are investments, some are trades on binary events.  We have been selling calls and puts on some, reducing our exposure to others, and otherwise just waiting for data .  I want to take this time to revisit a few of our old picks, as well as look at upcoming events that will move some stocks for better or worse.


Seattle Genetics (SGEN) – we played them for the approval, and we did not get the huge pop we expected, but the buywrite strategy worked just fine.  This is one I would hold on to, as I believe they will not be around forever.  Buying the…

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