Dan Nathan shared with the audience of CNBC's Options Action his bullish trading idea in SPDR S&P Biotech (ETF) XBI.
He thinks that bad news is already priced in and he explained that the real fear about the biotech space is that the Democrats will win the Presidency, the Senate and the Congress, which would make serious headwinds for drug pricing. He doesn't believe that the Democrats are going to win everything and he sees a chance for a potential recovery for the biotech stocks by the end of the year
Nathan thinks the best way to set up a long position is with the January 60/75 bullish call spread, which costs $4. The trade breaks even at $64 or 7.15 percent higher and it can maximally make $11 if the stock jumps to $75 or higher.
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