Trade Alert - (BIIB) - BUY
BUY the Biogen (BIIB) July, 2017 $260-$265 in-the-money vertical bull call spread at $4.25 or best
Opening Trade
6-22-2017
expiration date: July 21, 2017
Portfolio weighting: 10%
Number of Contracts = 24 contracts
When a market is expensive, you look for cheap stuff.
That draws me to the health care and pharmaceutical sectors, the only ones that brought in negative returns in 2016.
Thanks to the retirement of the baby boomers, there is a secular structural growth in demand for their complex products.
Despite all the political noise, the long-term fundamentals are rock solid.
Valuations are at a five-year trough. They are the cheapest stocks in the market.
I think the health care and pharmaceutical industries will be some of the top performing sectors of 2017.
And because of the calendar, we get a short 20-day position in the stock with a humongous 13.50% profit.
If you can't do options just by the stock outright. It is has at least 20% in it in coming months.
Yes, we are only a presidential tweet away from a one-day correction in the stock. But the spread structure with the short call leg should provide ample protection against this possibility.
So to play it ultra safe, just buy the Health Care Select Sector SPDR ETF (XLV) instead, a basket of big health care stocks with much lower volatility.
This is a bet that the (BIIB) will not trade below $265 by the July 21 expiration in 21 trading days.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on How to Execute a Vertical Bull Call Debit Spread by clicking here at https://www.madhedgefundtrader.com/ltt-executetradealerts/.
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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
Be sure you've signed up for our FREE text alert service. When seconds count, this feature offers a trading advantage. In today's market, investors need every advantage they can get.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you.
The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.
Don't execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile with only 13 days to expiration.
Here are the specific trades you need to execute this position:
Buy 24 July, 2017 (BIIB) $260 calls at........................$23.00
Sell short 24 July, 2017 (BIIB) $265 calls at................$18.75
Net Cost:..............................................................$4.25
Potential Profit: $5.00 - $4.25 = $0.75
(24 X 100 X $0.75) = $1,800 or 17.64% profit in 20 trading days.
