Q1 of 2016 wrapped up Thursday in historic fashion. After being down more than 10% at one point, the S&P 500 SPX staged a massive rally and ended the quarter in the green. How rare is this? It hasn’t happened since 1933.
As we head into April, option bulls still have their foot on the gas. Biotechnology has been a bit of a lagger in the recovery, but one sharp trader thinks this sector is now primed to take the lead. Earlier today this customer bought 10,000 April 52.5 calls in the S&P Biotech ETF XBI – NYSE.
Bottarelli Research Translation: He paid $1.20 per contract, amounting to a total outlay of $1.2 million in option premium. With a break-even price at expiration of $53.70, XBI has to gain 3.9% for this trade to profit. With today’s rally, XBI has once again closed above the 50-day moving average. From here it seems to have clear skies up to $54 and closing at that level would deliver a modest profit, but you can bet this trader is looking for more. Above $54 XBI can conceivably run all the way to $60, turning this trade into a multi-million dollar winner.
My position:
Company Sym Type %Val +Date $Add $Last %Chg
Biotech 2xbull BIB Long 11.17% Details » 39.65 43.23 9.03%
Biotech 3xbull LABU Long 26.71 29.97 12.2%
Energy 3xbear ERY Long 10.89% Details » 21.70 22.99 5.94%
Apr.2, 2016
