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The 2012 FDA Trades

Written By Brian Hicks

Posted March 19, 2012

As we’ve said, if you’re not following the FDA, you’re not serious about making money…

…because, let’s face it, making money from the FDA couldn’t be easier.

We may have been stopped out of Bio-Reference (BRLI) February 2012 12.50 calls, but readers that held were up more than 200% just two months later.

Or, take our Arena Pharmaceuticals August 5 call recommendation… Thirteen trading days into the trade, we were already walking with 338% and 193% gains… as the chart went hyper-parabolic.

We even knew the momentum crowd was about to enter the fray… and drive this stock to the moon.

We’re not always going to get it right, though. Sometimes, as with the case of Columbia Laboratories (CBRX), the crap can really hit the fan. But more often than not, we do quite well.

In the last month alone, we took 71% and 220% gains on Furiex Pharmaceuticals in only two weeks; and a 71% and 53% gain in 12 days on Threshold Pharmaceuticals.

Just how do you profit from FDA decisions?

Leave yourself plenty of time to trade prior to FDA decision. We’re talking about two to three months in advance, at best. Don’t get greedy with returns.

While these decisions are among the biggest factors, know this.  The FDA’s unpredictable nature won’t always lead to a sure-fire winner.

Yet it really doesn’t matter what the FDA says…

What does matter is being in the know and being in the right place at the right time.

Most of us who use the FDA calendar and Phase III trial dates know one thing: The price of a biotech and pharmaceutical company will go up as the date in questions draws closer.

And if you want to maximize your potential return, have any pending dates in hand at least one to three months in advance. (I should note that in some instances, you can buy a stock days in advance using conference dates.)

You see, as an FDA decision date, Phase III result date, or conference nears and people expect to hear good news, crowds of speculators and traders start coming in to buy the stock, sending the stock up.

This happens over and over again with many biotechs and pharmaceuticals. The only key is having the information in as far in advance as you can… again, this is why having the FDA information is so important.

We also know that FDA approvals, rejections, even Phase III study results can make or break any pharmaceutical company. There have been instances where a company has lost 90% of its value… and there have been instances where a company rises 800% in a single day.

Our latest FDA trades can be found under the Options Trading Pit Reports section. Enjoy.