ETF/Index options volumes were relatively tame going into the weekend, but we did see some put interest in the Biotech sector via IBB (iShares Nasdaq Biotechnology, Expense Ratio 0.48%).
The August 225 puts were in demand which are well out of the money options but in reality, the ETF has traded as low as a $207 handle to as high as a $266 handle inside of a
quarter in the recent past. The top current holdings in IBB are expected to report earnings in the near term (CELG 7/24, GILD 7/23, AMGN 7/29, BIIB 7/23, and ALXN 7/24), and these top five names make up >37% of the overall underlying portfolio.
IBB is the largest “Biotechnology” focused ETP in the marketplace with >$5 billion in assets under management at the moment, but the fund and its underlying names have been known in the recent past to display extreme volatility and at times uni-directional short term price trending (see short term chart from mid-April until now) but such is the nature of the beast when trading Biotech.
IBB has seen net inflows to the tune of >$200 million now year to date, which if anyone recalls, is a complete 180 from where we were several months back as some holders had begun to bail.
Also in the Biotech space, FBT (First Trust AMEX Biotechnology, Expense Ratio 0.60%) has grown notably to be the second largest fund in the space with about $1.3 billion in AUM. XBI (SPDR S&P Biotech, Expense Ratio 0.35%) is also part of the billion dollar club with $1.1 billion in AUM.
Given the recent uptick in options trading in IBB and impending earnings season, it is not surprising to see some play in leveraged ETFs that track the same Nasdaq Biotech index as IBB, and these are BIB (ProShares Ultra
Nasdaq Biotechnology, Expense Ratio 0.95%) and BIS (ProShares UltraShort Nasdaq Biotechnology, Expense Ratio 0.95%) which now have >$350 million and $64 million in AUM respectively.
iShares Nasdaq Biotechnology ETF
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