UPDATE: FDA approves Xenoport's restless leg syndrome treatment, Horizant

~~~ Xenoport receives FDA approval for its drug, Horizant, against restless leg syndrome ~~~

http://www.reuters.com/article/2011/04/07/glaxo-horizant-idUSN0629415020110407

Now, this was a complete surprise!  In my opinion, Horizant should not have been approved despite its status as a resubmission (read here to see why).  This further reiterates FDA's unpredictable behavior from time to time.  If they had followed their own stringent requirement for safety, even a hint of carcinogenic risk (which was found associated with Horizant) would have deterred them from approving a drug!!!  What a surprise to see them clearing the drug this time around!

Yesterday I was able to off load 50% of my options as I felt the upward momentum was too strong and that it was appropriate to lower the risk by half ahead of today's decision (it turned out that my hunch was correct).

Now what?!

I am going to stick with my Hike-n-Slide strategy to trade an FDA approval.  On the news tonight, most people reacted and rushed in on Xenoport's stock (XNPT) - XNPT was already up 56.7% in after-hour trading ('the Hike').  I anticipate more buying early tomorrow morning before the stock crashes on weaning of investors' overreaction, or irrational hype (the 'slide').  I will look into purchasing May $10 or $11 put options, expecting share price to come down from its peak relatively quickly.  Apr options may be a little too risky as they will expire by the end of this week.  May options, on the other hand, will allow more than a month for the stock to slide from the post-approval peak.