Just about a year after Democratic presidential nominee sent biotechnology stocks and exchange traded funds tumbling with rhetoric aimed at high drug prices, one would think that any healthcare company and its executives opting to raise prices on devices, pharmaceuticals and treatments by hundreds of a percent is just asking for trouble.
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Well, Mylan NV (MYL) can now be a case study in bungling executive leadership after revealing steep price increases for its EpiPen used to treat patients with severe allergic reactions. As the Wall Street Journal reports, EpiPen cost just $100 in 2009. Today, some patients pay about $600 for the treatment.
This equates to Christmas in August for Clinton who, rightfully, spoke out against Mylan's price hikes. It's also a gift for active traders. As has been widely documented, many analysts and market participants have highlighted the healthcare sector, the third-largest sector weight in the S&P 500, as potentially vulnerable under a Clinton presidency.
That isn't exactly breaking news. Investors have been able to surmise that for at least a year. Fortunately, there are ways for risk-tolerant traders to profit from Clinton's near-term impact on the healthcare sector. Enter the Direxion Daily S&P Biotech 3X Bear Shares (LABD).
On Wednesday, LABD gained nearly 12.3 percent on almost quadruple its trailing 90-day average volume. Increasing the allure of LABD and its bullish cousin, the Direxion Daily S&P Biotech 3X Bull Shares (LABU), for active traders is the confirmed and documented inverse relationship the healthcare sector has to Clinton's poll numbers.
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Put simply and hypothetically, it'd be a traders dream true to buy LABD on a Monday and see a credible come out Tuesday showing Clinton expanding her lead of Republican nominee Donald Trump because there's a solid chance healthcare stocks will fall in response.
LABD aims to deliver three times the daily inverse returns of the S&P Biotechnology Select Industry Index.
As of June 30, 2016, the companies included in the Index have a median market capitalization of $1.20 billion and an average market capitalization of $8.14 billion. The components of the Index and the percentages represented by certain industries in the Index may change over time, according to Direxion.
Over 90 percent of that index's combined weight is allocated to biomedical/genetics companies and pharmaceuticals makers.
LABU is up 5.4 percent over the past month, while LABD is down nearly 12 percent over the same stretch.
2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.