Speculative stock – INCY – Incyte Corp

Jim Cramer mentioned INCY last night in the lightening round.  In short – the company is a drug discovery and development company and carries a lot of risk.  That makes the premiums high.  Apparently it has a lot of potential, but with drug companies that means nothing until it’s realized and then it means the world.  Only enter into this one as a gamble. 

INCY is off its highs and might find support around its current price of 7.50.  The next stop on the way down could be 7.00 and then down to 6.00.  If 7.00 were likely to be the low the June 7.50 puts at $0.50 would be worth the trade, but I can’t peg it with enough certainty to make it work from my analysis.  Drug companies like this can be explosive with a short ratio of 11.3, but sometimes those crazy shorts know something and the stock gets pushed down quicker than you can react. 

If anything, I’m considering the June 7.50, but for much more than the current prices will pay.  The other possible move, still as an options trade, is to BUY the June 7.50 calls if INCY dips.  That’s actually a better way to play a spec stock usually, but for me as many of you know, income from selling options rules.