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Mike Khouw spoke on
CNBC's "Options Action" about unusually high options volume in
SPDR S&P Biotech (ETF)XBI. He said that in the first half of the trading session the call options volume in the name was twice the average daily call options volume, and it was largely a result of one trade.
A trader bought the September 75/80/85 call butterfly for $0.85. The trade breaks even at $75.85, or around 9 percent higher, and it can make its maximal profit of $4.15 if it closes at $80 at the September expiration. Above $80, the profit starts to trail off, and the trade starts to lose money above $84.15. It can maximally lose $0.85.
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