Speaking on Bloomberg Markets,
Scott Bauer of Trading Advantage said that he wants to trade SPDR S&P Biotech (ETF) (NYSE: XBI) ahead of the next presidential debate.
Implied volatility in the name is really high ahead of the event and he wants to take advantage of that. Bauer wants to sell the
October 14, 64 strike put and buy the October 14, 63 strike put for a net credit of $0.35. His maximal gain for the trade is $0.35
and he is going to collect the amount if the stock stays above $64 at the October 14 expiration. Below $63.65, he starts to lose
money and he can maximally lose $0.65.
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.