XBI High Conviction Reversal
Updated
The Biotech is oversold and is looking to revert back to mean. It is currently at its 180 SMA and ended Friday green forming a hammer candle pointing to an upwards move.
Trade Ideas:
Trade Ideas:
- Shares long between 136-140 to 145, 150, 160+ price targets. Bullish.
- Short Put at 115 expiring 4/16 for $1.15 Credit. $1150 BPE is a little pricy, but still a decent max ROC of 10% but has a 90% POP. Neutral to Bullish.
- Short Strangle 115-160 expiring 4/16 for $2.3 Credit. $1400 BPE, 20 max ROC and 78% POP.
Trade active
Close Short Put. The 115-Strike Short Put is currently trading for $0.32 resulting in a $0.83 or 72% Profit per contract.Take Profits on Shares. XBI is currently trading around $148 which is at least 6% above the entry.
While the strangle is still OTM, the short call has appreciated in value as XBI is trading closer to the short call than the short put resulting in a very small $0.2 loss per strangle. For delta management, the short put can be moved closer to $125 for an additional $0.60 credit if you wish to do so. Other than than, continue on with the trade for a max of 10-12 more days.
Trade active
Close Strangle. The 115-160 Strangle is currently trading for $1.38 for a $0.92 per strangle or 40% Max Profit.
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