RE:If you believe Concordia share price will recover Using your math:
5000 shares would cost $6000.
Buyout at $10/share would = 42% premium which is probably really the best a distressed buyout offer would look like.
10% ROI on 5000 shares would equal $5000, while the cost of buying the calls equals $6000 = so your at a ~$1000 loss. You would need a buyout above $10.5 to be in the money.
Not exactly great odds where we are at right now.
Is staying long 'risky' - I'm not convinced, even the most pessimistic models yielded a valuation of about $8 USD/share and using midpoint numbers yielded $12-$14 USD/share. When less than $10M worth of shares are droping the PPS 1-2% everyday it either means controlled sell off or manipulation. Given that the 2 days following the financials had sufficient volume for anyone interested to sell between $9 and $10/share it doesn't make sense that non-retail holders would have waited until $8 and below to sell as nothing has materially changed between August 12 and today for their models and IBB seems to be recovering.
My guess is that we are seeing a short raid coupled with retail capitulation. Do a little research and you'll see how easy it is for two or more parties to move shares back and forth to walk to the share price down incrementally while concurrently shaking frightened retail out.
If a catalyst arrives at some point, for example a strategic private placement similar to weight watchers, I expect the first $2/share PPS increase to $9 would be a given with the incremental share price appreciation over $9 being the actual premium for whatever ROI the strategic initiative is expected to result in. But when that will occur is questionable, so buying calls is difficult.
On the other hand, maybe I'll be wrong and some random issue will come out of left field and dry up the $200M in positive cash flow the company has/year and we will be struggling to make interest payments.
GL.