Viking Therapeutics, Inc. (VKTX), Trending Stock Report

As we move into the election & Fed meeting week, Viking Therapeutics, Inc. (VKTX) is the topic on social media. The stock is trending in the news and social mentions are up 4,200% in the last 24 hours. Volatility expectations are extremely high.

The stock price jumped as high as $91.71 in pre-open trading after the company reported test results on its new weight loss drug. This new drug is taken in pill form. Competitors like Eli Lilly & Co. (LLY) and Novo Nordisk A/S (NVO) deliver their GLP-1 drugs using injections. Now as of this writing, the stock has pulled back and is trading near $75.00 per share.

This is a speculative play. Our bet is that this week’s election on Tuesday and the Fed chair’s press conference on Thursday won’t affect VKTX share prices as much as news around its drug pipeline.

This Volatility Term Structure chart for VKTX shows us the implied volatility for the at-the-money options for each expiration. You can see the shortest term has the highest implied volatility. With volatility expectations so high, we will focus on a strategy that includes selling options. This opens up a limited-risk, high-probability opportunity.

This MDM graph compares the modeled expected distribution for future stock prices (the orange line) with the actual distribution of VKTX’s share prices over the past year (the blue histogram). This graph clearly shows that current options prices are expecting bigger moves in the future than the stock has actually made in the past year. This tells us that VKTX options are very expensive.

Investors are clearly talking about VKTX and the positive test result of their new weight loss drug. The volatility expectations are extreme and that opens up an opportunity for a high-probability trade.

To get the specific details and prices on today’s trade adjustment, be sure to read today’s ODDS Online Daily Option Trade Idea.