The iShares Nasdaq Biotechnology ETF (NasdaqGM: IBB), the largest biotechnology exchange traded fund by assets, and the rival SPDR S&P Biotech ETF (NYSEArca: XBI) are performing well this year. Underscoring that point, the two widely followed biotech ETFs are up an average of 20.5% year-to-date and some traders believe biotechnology stocks and ETFs will continue surging.

Market observers are growing more bullish on the sector as a Republican-led Congress and administration could enact reforms to free cash held overseas for tax reason by large U.S. pharmaceutical companies, which could pave the way for increased acquisitions in the sector.

“Meanwhile, the iShares Nasdaq Biotechnology ETF (IBB) and SPDR S&P Biotech ETF (XBI) just touched their highest points in more than a year, sparking a flurry of biotech options trading. What’s more, if recent history is any indicator, the IBB and XBI exchange-traded funds (ETFs) could be headed even higher in July, and now is an opportune time for short-term options buyers to strike,” reports Schaeffer’s Investment Research.

Investors are growing more bullish on the sector as a Republican-led Congress and administration could enact reforms to free cash held overseas for tax reason by large U.S. pharmaceutical companies, which could pave the way for increased acquisitions in the sector. The White House is also looking to help the Food and Drug Administration (FDA) expedite new drug approvals, which could serve as a major catalyst for the biotechnology space.

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