Biotech put spread hedges are historically cheap

Aug. 23, 2016

Options Backtesting Results

Historical average return: +$86.50 (backtested over 1.5 years)
Historical success probability: 53.9%


An options backtest shows that the cost to purchase put spreads on biotechnology ETF XBI is near its lowest level since early 2015. Hedgers worried about further turmoil in the biotech sector would find these options attractive due to their inexpensive current pricing and positive historical returns in the backtest.

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