bluebird bio: How to play LEAPS options for growth and income

Core Viewpoint - bluebird bio is positioned as a significant player in the gene therapy market with three FDA-approved therapies, benefiting from the recent surge in gene-editing news, particularly following the FDA approval of competing therapies [1][2]. Company Overview - bluebird bio has three FDA-approved gene therapies: LYFGENIA for sickle cell disease, ZYNTEGLO for beta-thalassemia, and SKYSONA for cerebral adrenoleukodystrophy [1][2]. - The stock price of bluebird bio has seen a dramatic decline from $158 in 2019 to as low as $0.87 in 2024, indicating high volatility and potential for recovery [1]. Market Dynamics - The FDA approved LYFGENIA on December 8, 2023, the same day as CRISPR Therapeutics' CASGEVY, which has garnered more media attention, yet bluebird bio benefits from the overall positive sentiment towards gene therapies [1]. - The gene therapy sector is experiencing significant growth, with bluebird bio's therapies addressing critical conditions like sickle cell disease and beta-thalassemia, which have substantial patient populations [1][2]. Investment Strategy - bluebird bio is considered an attractive option for speculators due to its low stock price relative to its potential upside, especially in the context of ongoing advancements in gene therapy [3]. - Long-term Equity Anticipation Securities (LEAPS) options are suggested as a strategy for investors looking to capitalize on bluebird bio's potential growth while generating income through selling out-of-the-money (OTM) calls [3][10]. Technical Analysis - The stock has shown a breakout pattern with key resistance levels identified at $1.53 and support levels at $1.40, $1.26, and $1.13, indicating potential trading opportunities [5]. - The current stock price is $1.46, reflecting a 16.80% increase, suggesting positive momentum in the short term [6][11]. Options Market - The analysis of LEAPS options indicates a breakeven cost of $2.55 at expiration, with significant upside potential if the stock price increases [9]. - Selling OTM calls can provide income while holding LEAPS, with potential yields of 25% for short-term options [12][13].