In The Money with Fidelity Investments – IBB & TWTR

by Dan May 21, 2020 9:11 am • InTheMoney• Trade Ideas

Yesterday in my In The Money series with Fidelity Investments I discussed two defined risk trade ideas, watch below:


Disclosure on strikes: by the time we printed the video, both the IBB and TWTR had moved up a couple of percent, making the strikes on the IBB look slightly further away from the money than I had initially hoped while the strikes on the TWTR idea in the money, so closer than I hoped, if I were coming to these same ideas today I would adjust strikes accordingly, both higher.


First, we discussed the optimism shown by investors as it relates to biotech companies’ abilities to fast track a vaccine for the coronavirus. As I detail in the video the group’s recent strength and positive sentiment regarding profit potential from therapeutics and vaccines developed for the coronavirus might be a tad premature. This summer we could see a sort of Sell the News set up in the IBB, the etf that tracks the space, no matter what happens. Here were my notes from yesterday morning for a defined risk bearish trade idea in the IBB:

Trade Idea #1: Bearish Biotech
IBB – Biotech… Short… Moderna Vaccine News and quick Secondary Offering of shares could really change the sentiment towards the group, especially if investors start to discount near-term news on Coronavirus Vaccine:

IBB ($132.50) Buy Sept 125 – 100 put spread for $5
-Buy to open 1 Sept 125 put for 6.40
-Sell to open 1 Sept 100 put at $1.40

Break-even on Sept expiration:
Profits of up to 20 between 120 and 100 with max gain of 20 below 100
Losses of up to 5 between 120 and 125 with max loss of 5 above 125

The ten year chart below shows what might be an epic double top with support back near $100, which would represent the uptrend from the 2014 lows:


Next, I detailed I bullish strategy on Twitter (TWTR) with the thought that plans for the NBA to come back this summer with a “playoff” season, MLB to start an abbreviated season this summer, the NFL to confirm their plans to play and of course the presidential election kicking into high gear could cause a massive surge in engagement, bring back advertisers that might have dialed back during the pandemic, and possibly reinvigorate user growth. When I came up with the idea Tuesday night the stock had closed at $29.88, by the time we filmed the video yesterday morning the stock was $31.40 and by the time we printed the video in post-production the stock was $32.23:

Here are my notes from yesterday morning:

TWTR ($31.40) Buy July 32 – 37 call spread for $1.50
-Buy to open 1 July 32 call for 2.20
-Sell to open 1 July 37 call at 70 cents
Break-even on July expiration:
Profits of up to 3.50 between 33.50 and 37 with max gain of 3.50 at 37 or higher
Losses of up to 1.50 between 32 and 331.50 with max loss of 1.50 at 32 or lower…
trade idea risks 5% of stock, make 11% of up 16% in two months
The stock is at a key technical level of $30, could re-test downtrend near $35 on slightest bit of good news: