Story
Viking Therapeutics Options See Large Bullish Bet on Mid-October Rebound
Summary
A significant options trade in Viking Therapeutics (VKTX) suggests at least one large trader is betting on a substantial stock price recovery by mid-October, following a recent sell-off tied to clinical data.
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
AdThis 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.
Read next
More on Stocks
AMD Options Market Sees Bullish Bets on 80% Surge by 2027
Sophisticated options trades, including a large diagonal spread, indicate some investors are positioning for Advanced Micro Devices' stock to rise as high as $1,120 by late 2027, fueled by long-term AI revenue forecasts.
Apple Stock Forms Potential Double Top Pattern Near All-Time High
Apple shares are consolidating in a narrow range between key support and resistance levels, with technical analysis pointing to a bearish double top pattern and waning momentum. A breakout from this zone is expected to dictate the stock's next major move.
Former xAI Employee Seeks $50 Million for Deepfake-Fighting Startup Moir
Tina Oberoi, formerly of xAI and Google, is reportedly in talks to raise $50 million in seed funding for Moir, a new company valued at $250 million that aims to combat AI-generated deepfakes.
Grail Stock Soars After Positive FDA Staff Review of Galleri Cancer Test
Shares of Grail Inc. surged after U.S. Food and Drug Administration staff reviewers found no major concerns with its Galleri multi-cancer blood test ahead of a key advisory panel meeting.