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This debit spread is a conservative way to play OSI upside if the stock continues to rally
Related Symbols: OSIP
OSI Pharmaceuticals (OSIP) shares have been trending higher since their July lows, possibly on news that the firm is working on developing a drug to treat mesothelioma. OSI specializes in the discovery and development of innovative molecular targeted therapies.
From the asbestos.net website: “The drug, called OSI-930 for now, has shown positive results in treating small and non-small cell lung cancer, colorectal, gastric, and other cancers. Its effectiveness in treating these cancers has the teams working on its treatment of mesothelioma as well.”
The call spread outlined below is a conservative way to play the upside in OSI if the stock targets its early 2009 highs.
OSIP Debit Spread Trade Detail
OSIP is currently trading at $33.99.
Debit Spread/Bull Call Spread -
Profit/Loss Details:
Maximum risk: $1.15 (the debit paid at the time of the trade). Plus commissions.
Maximum potential profit: $3.85 (the difference between strike prices -5 – minus the debit of $1.15). Return on risk is approximately 335%.
Breakeven: 36.15 (the strike price of the purchased call plus the debit paid).
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