Viking Therapeutics Options See Large Bullish Bet on Mid-October Rebound

A large, bullish options position was established in Viking Therapeutics (VKTX) on Monday, signaling a bet that the biotechnology firm's stock will recover significantly by mid-October. The move comes after the company's shares declined following a clinical data readout earlier in the month.

The Trade in Focus

Market data revealed a dominant transaction structured as a call spread for the October 16 expiration, involving 4,016 total contracts. The trade consisted of two parts:

• Buying 2,008 contracts of the $35 strike call options.
• Selling 2,008 contracts of the $50 strike call options.

This strategy allows a trader to profit if Viking's stock rises above $35 per share before the mid-October expiration, with potential gains capped if the price exceeds $50. The $35 strike is noteworthy as it approximates the level where VKTX traded before its data-related sell-off on September 11, suggesting a bet on a full technical recovery.

Volatility and Market Signals

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This trade is a risk-defined way to express a bullish view, a rational choice given the stock's high implied volatility (IV) of 94.22%, according to Investing.com. While this level indicates options are expensive, it has declined slightly, reflecting a post-event "volatility crush."

Furthermore, the options market is showing a positive call skew, meaning that upside call options are priced at a premium compared to downside put options. This pricing structure is unusual for equities and signals that the market is assigning a meaningful probability to a sharp rally. However, significant put volume was also observed, indicating that bearish hedging or bets remain a factor.

Context for Investors

Viking's stock was trading at $28.48, down 1.76% for the session as of Monday afternoon, near the lower end of its 52-week range. The stock is down approximately 19.86% year-to-date.

The bullish options bet contrasts with the stock's recent performance but aligns with a broadly positive analyst consensus. According to Investing.com, 20 analysts have a mean price target of $92.58. Investors must weigh this potential against the inherent risks of a clinical-stage biotech firm with no revenue, significant quarterly cash burn, and intense competition in the GLP-1 drug market.