vd,
The calls are acting exactly as they should. The large premium in those calls was due to the uncertainty of the event that occurred today. It's like letting air out of a balloon. There is now no expectation at all that this stock will rise to $12 or beyond based on this unknown (trial results) alone. This will end up being a good learning experience on how those things work.
Let me give you a somewhat absured example, to make my point another way: let's say an FDA up or down was expected on a company on a date certain, say August 10, and the stock is currently trading at $10, and it's clear the expectations are that after the up or down is made public, the stock could be as high as $20 or as low as $3. Well, a call option expiring, say, on Sept 17, strike price $17, might be trading for $1.00. If the FDA says thumbs up, and the stock zooms from $10 to $15, there is no way that the $1.00 price will hold, cuz now, the expectations for $20 or more are pretty much gone. I would guess such options would go to about .40. Now, of course, if there are strong expectations that a partnership was going to be entered into prior to Sept 17, then, perhaps, the price be retained, or might even go up, given the approval and all.
MNKD does not have the FDA approval, and the partnership thing is anticipated, but far from a done deal, so the expectation there is not strong enough to keep those out of the money calls at the price they were enjoying yesterday.
Same thing happens right before an earnings report on a company such as, say NFLX. The stock's at $250, right before earnings you buy calls one month out, strike $290, earnings report is good, stock zooms to $275, you lose on your $290's.
Once you've seen this once or twice, the workings of the option market will become clear to you.
