In our Short-Term Portfolio, we have a July spread on Intrexon (XON), who are working on genetically modified mosquitoes that only produce male offspring to introduce into the population to cut down on breeding. They also own most of AquAdavantage, who make super fast-growing salmon (ready in 18 months vs 3 years for normal salmon), which got FDA approval in November and now by Health Canada, so that's going to be a huge business too.
We're already up $2,600 (65%) on our spread (we jumped on the story back in January) but, as a new trade on the company and for our Options Opportunity Portfolio I like (with the stock at $28.62):
- Sell 5 Jan $20 puts for $3 ($1,500)
- Buy 10 Oct $25 calls for $7 ($7,000)
- Sell 10 Oct $30 calls for $4.60 ($4,600)
That will net us into the $5,000 spread for $900 in cash and our upside potential at $30 is $4,100 for a 455% gain on cash in 6 months. If XON is below $25, we risk losing our $900 and below $20 (down 30%) , we risk being assigned 500 shares at $20 ($10,000) – that's our worst case and, if it were just Zika, I wouldn't risk it but the salmon story is solid and should lead to very nice long-term revenue growth.
