Tuesday, July 5, 2011

Trade of the Day: Biogen August $110/$120 ratio call spread 1x2

The Trade
A trader bought the August $110/$120 ratio call spread bought 1,500x3,000 at $2 to open.

The trader is making a bullish bet that BIIB will make new 52-week highs before August expiration. The $26B Biotech trades 17.5x earnings, 5.45x sales and 19.23x cash flow. Deutsche Bank raised to Buy on June 21st with a $129 target. CSFB raised to Outperform with a $126 target. The trade is profitable with the underlying between $112 and $128.

The chart shown above is the BIIB daily stock chart. The white lines show the profitable range for the spread. BIIB traded 6,312 option contracts compared to average daily volume of 2,748.


*Special thanks to Option Radar, BMO Capital, MEB Options, LiveVolPro, CBOE, Option Monster, T.O.P. group, and all of the options desks and traders we work with to provide the option flow!

No position at this time. Position declarations are believed to be accurate at time of writing but may change at any time and without notice.

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