A Trump vs. Clinton Options Strategy


Tonight we'll see the first US Presidential debate debate between Donald Trump and Hillary Clinton.

I'm going to leave my personal opinions about both candidates out of this, and keep it focused on the markets.

A major reason biotech (IBB) has rallied in recent weeks was Hillary Clinton's pneumonia diagnosis.

Since she has been an outspoken critic of rising drug prices — specifically targeting Mylan's (MYL) Epipen — she is seen as an enemy of biotech and big pharma.

Her illness boosted Trump in the polls, which in turn gave biotech a reprieve.

That's perhaps a bit ironic, because Trump himself has been critical of drug company pricing practices.

So heading into the debate, there appears to be a binary outcome — not between the candidates, but whether or now there is a decisive outcome.

If it's a close call, that will just add to the confusion and the impact on stocks is a wash.

But if one side scores a big victory, odds are these stocks move, at least in the early going.

So I'd look at the following trades depending upon one's stance about the outcome:

Benefits from a big Clinton or Trump victory:

-Buy IBB $295 straddle expiring October 15 for $7 (give or take 10 cents)

Benefits from a stalemate:

-Sell IBB weekly $285/$290/$300/$305 iron condor expiring Friday for $1.88 (give or take 5 cents)

I'd keep any positions small, and would look to close out either one tomorrow on the open.