On Friday’s CNBC’s Options Action, the crew analyzed Biotech’s recent performance compared to the overall market (SPY). Analyzing the relative performance between Biotech (IBB) and SPY shows a possible good entry point now. Additionally, BMY has fallen roughly 40% since it’s highs in July, approximately the same amount as a previous selloff in the late 1999’s. This provides a possible long entry on an oversold stock in a subsector that could be turning around. It should be noted that this trade is very much trying to catch a falling knife. Expecting a possible move higher, Michael Khouw suggested buying a Jan 52.5/57.5 Call Spread for $1.50 Debit.
We’ve structured this trade in OptionsPlay so you can analyze and view this trade along with the supporting technical chart at your convenience. You can also view the Options Action’s video by clicking on the following link: CNBC Options Action