XBI - Biotech may be running out of fuel
In January 2021, you a quick selloff in XBI caused RSI to dip below 20 while directional selling volume also spiked over 50 (yellow rings). This "oversold" condition led to a quick sharp up move (yellow arrow, RSI crossed up over red line), then consolidation before a prolonged move higher.
Now I am looking at a peak in RSI and a spike in directional buying volume (pink rings). I like swing puts here, and there are two trades you can plan. If I buy swing puts now (2/19 strike) I would close them on a drop as RSI crosses below the green line - IV should increase and improve my return. Then I will look for another swing put trade setup if XBI indicates a greater move lower on daily/60m timeframes.
Now I am looking at a peak in RSI and a spike in directional buying volume (pink rings). I like swing puts here, and there are two trades you can plan. If I buy swing puts now (2/19 strike) I would close them on a drop as RSI crosses below the green line - IV should increase and improve my return. Then I will look for another swing put trade setup if XBI indicates a greater move lower on daily/60m timeframes.
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Bought 2/19 170 puts and sold them today for 73% gain per contract.
