Biogen (BIIB) – Trade Idea

Company Description

Biogen Inc. is a biopharmaceutical company. The Company focuses on discovering, developing, manufacturing and delivering therapies to people living with serious neurological, rare and autoimmune diseases. The Company markets products, including TECFIDERA, AVONEX, PLEGRIDY, TYSABRI, ZINBRYTA and FAMPYRA for multiple sclerosis (MS), FUMADERM for the treatment of severe plaque psoriasis and SPINRAZA for the treatment of spinal muscular atrophy (SMA). It also has a collaboration agreement with Genentech, Inc. (Genentech), a member of the Roche Group, with respect to RITUXAN for the treatment of non-Hodgkin’s lymphoma, chronic lymphocytic leukemia (CLL) and other conditions, GAZYVA indicated for the treatment of CLL and follicular lymphoma, and other anti-CD20 therapies. The Company’s product candidate includes OCREVUS; Biosimilar adalimumab; Aducanumab; E2609; BIIB074; BAN2401; Opicinumab; CIRARA; BIIB061; BIIB054; BIIB067, and BIIB068. Source: Reuters

Charts

Option Pricing

  • Implied Volatility (expected price movement) for short-dated options is 40%
  • Realized Volatility (historic price movement) for short-dated options is 86%
  • Implied Volatility Percentile for short-dated options is 95%

Trade Idea

Yesterday the company surprised traders with plans to (re)submit its Alzheimer’s treatment for regulatory approval in the U.S. On the back of this news BIIB shares closed up 26.1% at $281.87. Should yesterday’s significant rebound hold, numerous analysts could upwardly revise their price targets on BIIB. The consensus 12-month price target of $256.85 now stands at ~9% discount to current levels, suggesting price-target hikes could be on the horizon. If you are bullishly inclined one could trade current bullish momentum in an intelligent and risk-defined manner such as:

SideQtyExpStrikeType
Buy115 Nov290Call
Sell115 Nov295Call
Buy115 Nov300Call
Sell115 Nov305Call

Risk/Reward:

  • Break-even on expiration: 293.40
  • Max loss of $3.40 at or below 290 
  • Max gain of $6.60 at or above 305

PnL Graph

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