Related: A Good Time to Own Biotech ETFs
The robust “appetite for XBI calls is relatively rare. The fund’s 10-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) indicates that buyers have picked up 4.52 XBI puts for every call during the past two weeks. This ratio is higher than 95% of all other readings from the past 12 months, indicating a bigger-than-usual affinity for XBI puts over calls in the past two weeks,” notes Schaeffer’s.
ETF traders who are betting big on the biotechnology sector rebound have also utilized leveraged long options including the Direxion Daily S&P Biotech Bull Shares (NYSEArca: LABU), which takes the 3x or 300% daily performance of the S&P Biotechnology Select Industry Index. That is the same index XBI tracks.
For more information on the biotech sector, visit our biotechnology category.