Buying ILMN put contracts.

Illumina Inc. (ILMN) is a biotech company specializing in genome sequencing.

The stock has been extremely weak alongside a drop for most biotech stocks. But even after it’s drop, ILMN still trades for about 85 times expected earnings — a very rich valuation.

Momentum is decidedly negative and a recent rebound from oversold levels gives us a good entry point for a new bearish position.

Buying March $380 put contracts gives us time for the trade to evolve. We’ll also get the benefit of close to a $1 for $1 option price movement if the stock drops, while muting potential risk through added time value if the stock rises.