Orexigen (OREX) - put options yielded 138% return since FDA advisory committee meeting

Orexigen`s December put options with $10 strike price were traded at $0.65 on the morning after the company`s met with the FDA`s advisory panel (Dec. 8, 2010) regarding Orexigen`s late phase obesity drug, Contrave.  At one point the options skyrocketed to $1.90 before settling at $1.55 at Friday`s close.  Because it was rightly predicted that OREX would come down significantly from the post-approval hype, those who purchased put options profited from the fall of OREX`s share value.  So how much profit is that?  Well, let's look at an example:

# of contracts purchased:  10 (options to sell 10 x 100 = 1,000 share)
Cost of purchase:  $0.65 x 1000 = $650
Investment return:  $1.55 x 1000 = $1,550
Net gain:  $1,550 - $650 = $900
% gain:  138%

Not bad for 2 days of waiting?  I certainly think so!