RE: Tremendous spread!24 Jul 2020 12:27
oilornothing - I've not been commenting on the price (or any buys/sells I've done personally) because I don't want it to influence anyone positively or negatively in the current situation.
I think there's a lot of ways this can now play out and each with differing effects on the SP. That ranges from massive deals / takeovers /EMAs, to middleground ones with partnerships/licencing possibly funding further trials to try to achieve authorisation, to more negative scenarios (won't elaborate because people will get grumpy).
I'm not deliberately not commenting on the likelihood of any of the options, as nothing is a foregone conclusion, in many ways it's not a lot different to punting at 35p-80p. The price reflects the results were very good, and much better than expected, so the discount for risk is now much lower, but there's a way to go yet to make this a commercial reality.
So, as always, like on any share, I think all you need to do is estimate the potential rewards in the great scenario, moderate scenario, and bad scenario. Estimate your own likelihood of each scenario and multiple the gain / loss by whatever stake you're putting in. Should help you determine what level of stake you're comfortable with for the risk/reward (and that will be different for everyone).
I virtually never use stops on AIM shares, HOWEVER, if you're not using massive stakes, then I would say the best tip you could possibly get right now, is to use a spreadbet, with a guaranteed stop. IG offering it for up to £75/point right now. The stop has to be a minimum of something like 80-90 points away (seems to vary). It's no different to using shares (apart from you don't pay tax) AND the killer advantage is, if this went wrong and ended up in the negative case, and tanked sharply, it would limit your losses significantly. Therefore you're actually taking less risk than you would be with shares but retaining the upside.