Celladon Corporation (CLDN) is a clinical-stage biotechnology company. The data from their Phase 2b “CUPID 2” study will be released “by the end of April 2015”. This is a speculative situation, binary event stock, but the preliminary data has been great so far. The stock closed today around $17, and based upon the data to be released, this stock could be below $5 or above $50. The way to play the stock with limited risk is with an option combination. I am long the stock ($17.25), long the May $15 puts ($6) and short the May $40 calls ($4). My all in cost with buying the put and selling the covered call is around $19.35. My risk is down to $15 (long the puts) or $4.35 but my upside is $20.65 (short the $40 calls). I have done several trades with the combo for a net debit of $2.10, but if that is not possible due to changing prices, I also did the May $15 put June $40 call combo for $2 debit.
The fact that both the May $40 calls and the May $10 puts are over $3 shows how much volatility is in the stock. If you don’t understand options and how to use them, I would avoid the name except in very small doses. Everyone wants a stock that goes up $30 points in a day, but no one wants a stock that drops $14 points in a day.
Good luck to all investors and (more importantly) all the patients in the study.
http://www.celladon.com/clinical-trials/cupid-2/