Just after the opening bell on Monday, the FDA announced its approval of Biogen’s new Alzheimer’s drug, Aduhelm.
Trading was halted several times as the news shot Biogen Inc. (Nasdaq: BIIB) shares off like a rocket, gaining 63.5% in just under three hours.
Biogen’s bullish momentum helped spark a rally across the sector as shares of Eli Lilly and Co. (NYSE: LLY) jumped 10% to a record high while Cassava Sciences Inc. (Nasdaq: SAVA) surged over 9%.
This is the first new Alzheimer’s drug to be approved in almost two decades, and Wall Street was monitoring the progress closely.
Not only were shares pricey, but Biogen’s bullish momentum and implied volatility (IV) around the unknown event meant its options chain was ridiculously expensive…
But a direct play on Biogen wasn’t the only way for traders to get exposure to this breakout event…
On June 3, I sent out an alert to Blockbuster Breakout Calendar members to target the iShares Nasdaq Biotechnology ETF (Nasdaq: IBB).
At the time of the alert, BIIB was the seventh-largest holding in the portfolio, making up about 3.3% of the ETF.
So instead of playing the pricey Biogen options hovering around $30 — so $3,000 for one measly contract — a cheaper alternative is to play the ETF.
In this case, I targeted the IBB June 18 $151 call options at $3 per contract — so a $300 buy-in.
With this play, a trader could have exposure to the breakout date for BIIB, but with limited risk at one-tenth the price of a direct play.
And when the news broke Monday, pushing shares of IBB over 5.5%, we were ready to cash in on Biogen’s bullish momentum for a 183% gain in less than three trading days!
This is exactly why we trade and why we want to be proactive — and smart in the moves we make.
Because when everything you set up goes to plan, it’s a fantastic feeling that pays.
Check out the clip I recorded for members on Monday as I watched this play out in real time. Subscribe to our YouTube channel, leave a comment and let me know if you had a trade on Biogen’s bullish momentum or any of the other biotech stocks riding its coattails.
P.S. What if everyday traders never had to stare at a stock chart again?
So they could just place a simple trade on Tuesday morning… walk away…
That means instead of refreshing news headlines over the weekend or stressing about how the markets will open on Monday…
They’re off for a quick three-day vacation to the beach, a national park or maybe just relaxing!