Sector Rotation Strangle - Long Bio, Short Specialty RetailThis is a complex play that involves a lot of risk and the use of options on both ETFs and Stocks.
Goal: Capture the apparent sector rotation activity between Biotechnology and Specialty Retail.
I have been waiting quite some time for these two sectors to start playing out the way they ought to, based on earnings across the board and common sense.
I see LULU's miss as the final act before the fringe players in the retail space get hammered down.
I have also been waiting for biotech to turn, as it has been stagnant for quite some time. I think getting into VRTX is wise, as it is one of the top players in the space and just got a nice price upgrade.
Meanwhile, while longing VRTX and XBI (bio ETF), I plan on buying a put position in URBN (worst specialty retailer) and XRT (specialty retail ETF.
Again, very risky play given the current market environment, but the tape tells me this will work.
Let's see.
AMEX:XBI AMEX:XRT NASDAQ:VRTX NASDAQ:URBN
