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On Monday, I mentioned that the biotech sector was ripe for a comeback, and I gave you some short-term options to play in the iShares Nasdaq Biotechnology Index (ETF) (NASDAQ:IBB) to play it. Today, I want to give you a specific biotech that I’ve been following for some time: Inovio Pharmaceuticals (INO).
Inovio has nine clinical drugs in development, largely in Phase 1; as such, the stock carries significant risk. However, because there are no vaccines or treatments for the Zika virus, INO shares have been moving as the threat grows.
Inovio has been working on a Zika virus vaccine that could be ready for use in late 2016. The organization’s lead developer said Inovio was well ahead of its competition in the race for a vaccine. As we traders know, timing is everything.
Inovio shares traded to a high of $9.49 on Wednesday. The 52-week peak is at $10.83. Support is at $9-$8.75. A “golden cross” has formed, as the 50-day moving average is now above the 200-day moving average. This is typically a bullish setup for higher highs.
Resistance is at $9.75-$10. A close above the latter could lead INO shares toward a run at $11.50-$12. Here’s how I’m trading it:
Buy to open the Inovio May 10 calls (INO160520C00010000) at current levels up to $0.75.
If INO reaches the $11.50 to $12 level by late May, these options will be $1.50-$2 in the money. My exit target for the options is $1.10.
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