3/4/18:  Biotech put in February nets over 1,000% gain

 

The IBB Put option trade is a good example of why downside action is preferred. 

 

While option calls may net a few hundred percent gain as in the GLD trade… puts are a different story altogether.

 

Using our near-expiration method, it’s one day to expiration for the 2/9, IBB 104.00 Put.  All hope is lost with a contract price near zero at:  0.20.

 

Understanding where one is in a price move is critical.  On February 8th, the down move in IBB does not appear to be finished.  Price action over the prior two sessions rebounded modestly and appears to be in a stall.

 

Action moved sharply lower during the 8th and the early part of the 9th.  Real time tape reading was used to determine that we’re at an extreme and the trade was exited (with over 1,000% profit) mid-session as shown.

 

No more than a few minutes later, IBB began an upward move that ultimately culminated in a 105.67, close for the session.

 

Had the IBB put been held into the close, it would have expired worthless.