Got alot of requests for this so I will put it up, because the trade was complex but here was the idea of the trade:

I am not a fan of RNN.  I didn’t like it before this big run, didn’t like it when it was running, and of course still don’t like it now.  So, on friday when RNN ran to 2.60 and I could not get any short shares and suddenly some became available from one of my brokers (Who shall remain nameless because the commission rates are so high and will only name them again if they lower down commission costs not only for me but my followers as well) I jumped at it, believing full well three things:

RNN was going to present Serdaxin 2a results, unpartnered of course.

RNN around 7 million bucks in cash.

I was probably not going to get many short shares of RNN again.

So even though I thought there was a good chance of RNN going higher short term, I jumped at the short in hopes the stock went down friday.  It closed near the high of the day, so, AH boxed in 5k shares at 2.70ish to hold the short on ANOTHER broker LONG, tdameritrade, a brokerage firm with fair commission rates.

On monday was not around for the open ironically, but I got fully boxed on the name at 3.20.  So now holding 10k shares long in ameritrade around 3 and still the 10k shares short at 2.58, knowing full well that this could go higher.

So what I started to do was “working the long side of the box” at ameritrade.  By selling the 10k long shares on the rips and buying back lower, on serveral occasions to bring my box cost down, but never touching the short shares, because once covered, I would never get them back.

Sure enough, RNN closed near high of day on monday after some ‘goldman’ upgrade but did not matter to me because I was fully boxed.

Then today, I released the long side of the box again ironically above the 52 week high 3.7x and said I would be boxed again on the open around 3.45.  I checked again for short shares as I wanted to go as high as 20k but could only collect 2.5k more first thing in the morning.  Was right about knowing the time to short there would be no short shares available.

I remained boxed until the data came out in case I was wrong.  I released the box when I saw there was no partner, and a quick scan of the results told me data was just ok.  The box was released around $3.05.

I ended up leaving money on the table when covering half at 2.52ish and other half 2.36ish.  I covered because was up over 10k in total on the trade of working the box and cover, but also read the last line in press release that RNN ‘says’ still talking to partners.  RNN closed at 1.75 so there was much more in the trade but I always follow the motto cannot go hungry taking a profit.

Bottom line:  I felt there was a good chance RNN could run in this market so had to use 2 brokerage firms to do this trade.  I do not believe in technicals and price action in biotech.  I follow what I think I know and try to factor in the market sentiment which is frothy which forced me to do the box.

As far as RNN, it’s an avoid in my opinion. :P

Welsh