Discovery Labs received an approval for Surfaxin earlier this week (after hours on March 6th). I was, and am, bearish on this stock.
There was no way to borrow so shorting was not an option when DSCO opened for trading. Unfortunately I was not around to put on the trade – but it looks like buying the March $4 puts would have been the way to go. DSCO opened at $5.25 so they were way out of the money with only 8 trading days until expiration. These were trading at $5 per contract during the early morning on Wednesday.
As of the open this morning DSCO is at $3.65 so these puts are now $0.35 in the money. They last trade was for $40 per contract – in other words potentially an 8x return in 2 days! Of course, I missed it so it’s all hypothetical.