Yo Pit Crazies,
TradeFest was quite a success.
There was fun.
There were trades.
There was education
And, of course, the OP faithful – and soon to be OP faithful – were out in force.
I now think the world is in two categories:
- The OP legions of fans
- Folks preparing to be in the OP legion of fans
Yeah, I said that.
While I was presenting, the OP Legion came on en masse and said VIX was going to be higher – fading me like a $3 bill.
I said no way.
Guess what? I was wrong, so I will see if my remaining upside in VIX kicks in today.
It should be an exciting Friday, and I have a trade idea for 2022.
I Think IBB Will Make a 2022 Recovery
IBB is the iShares NASDAQ Biotechnology ETF (Ticker: IBB). It is hard to imagine that biotech, with all of the COVID madness in 2021, could be down on a trailing twelve month (TTM), but that is where we find ourselves.
Pfizer Inc (Ticker:PFE) had a huge run in 2021 and grabbed a lot of the oxygen in pharma, but surprisingly there was no real lift in this index.
IBB is only up 10% from pre-COVID levels so it did not really jump on the bandwagon.
If 2021 was the Year of the Jab, 2022 will be the Year of the Monoclonal Therapies.
And it only makes sense one of those big pharma companies snaps up a cheap biotech with all those big vax dollars.
Of course the key question is: what is the trade?
Besides just buying more IBB at current prices for my portfolio, I decided to purchase IBB March 18 135/130 1×2 put ratios that yield less than 1% or it could put me in IBB for less than $125.
I will start to nibble at that today.
IBB implied 180 day IV in orange.
The IV is looking pretty juicy (meaning higher) and is trading more in the middle of the range.
A stock like Biogen Inc. (Ticker: BIIB) went from a high of 5% of the IBB to 2.5% as it gets raked over for what I think is a breakthrough Alzheimer’s treatment.
I am not feeling buying calls yet so I am looking for a great entry price.
To Your Trading Success,