Kevin Kelly's IBB Trade

Kevin Kelly of Kelly & Co. suggested on Bloomberg Markets that investors should consider a covered call strategy in iShares NASDAQ Biotechnology Index (ETF) (NASDAQ: IBB).

He thinks it would be a good idea to buy the stock and sell the October 320 call for $5.20. Kelly explained that investors can make a total of 5.25 percent going out to October. The strategy offers some downside protection and it improves the cost basis for the trade. After the expiry of the call option, Kelly would continue to sell calls against the long stock position.