This segment focuses on the biotech sector and includes the results of a study designed to provide guidance in deciding whether or not to trade options and stocks in this sector. This segment will add to your trading knowledge.
Tom and Tony began explaining how biotech stocks are often subject to binary events. They explain how they can move sharply up or down and they provide an example of a stock that has done both. They looked at a chart of the XBI and IBB ETFs vs. the SPY and one could see how the biotechs have outperformed the broader market but have recently seen sharp sell-offs.
A table displayed the top four biotechs by market capitalization and also provided the IV and IVR for each. The numbers for profitability for the biotechs are quite different than that of stocks in the S&P 500. The percentage of stocks with negative earnings per share in both were provided.
A tastyliver may, at first glance, think the biotech sector is a great candidate for short premium. Tom and Tony reveal the flaw in that conclusion. To demonstrate this our research team ran a study to determine how often the top 50 stocks in the sector fell within the expected price range implied by the options. A table displayed the results for the SPY and the average for the 50 top stocks in the IBB for the percentage of days within the 30 day range.
Watch this segment of “Market Measures” with Tom Sosnoff and Tony Battista for the results of the study and the takeaways. Learn if selling premium in the biotech sector is a smart choice.
This video and its content are provided solely by tastylive, Inc. (“tastylive”) and are for informational and educational purposes only. tastylive was previously known as tastytrade, Inc. (“tastytrade”). This video and its content were created prior to the legal name change of tastylive. As a result, this video may reference tastytrade, its prior legal name.