Report Date: 23-Feb-2024
One of the ways that traders use options is to trade around significant catalyst-driven moves in stocks. Biotechnology is an industry that is known for having volatile moves around certain key events -- such as clinical trial results, healthcare conferences, and the announcement of PDUFA (Prescription Drug User Fee Act) news.
If traders know about these catalyst events ahead of time, they can apply strategies using options to take advantage of the stock movement.
The following table lists upcoming potential catalyst events and the option expirations that cover those anticipated event dates. You can see the current option straddle implied move compared to historical moves for the same time period.
In My Watchlist
|Healthcare Stock Info
|Potential Catalyst Event
|Options Covering Event
Option Implied Move vs. Historical Moves
(6-Year Historical Avg)
|Date Dates listed are provided from publicly-available filings announced by the companies. In many cases, these dates are estimates and are subject to change at any time.
Move Based on the options straddle price, the current implied move between now and expiration. Non-directional, could be up or down.
Move Over the past 6 years of observations within the historical distribution, the absolute average move for periods with the same # of days as the current days to go until expiration.
Abs Avg A ratio of the current implied move to the historical absolute average move. 1.0 is equal. Anything above 1.0 suggests the implied move has a greater magnitude than the historical absolute average.
Move Over the past 6 years of observations within the historical distribution, the maximum absolute move (either direction) for periods with the same # of days as the current days to go until expiration.
Abs Max A ratio of the current implied move to the historical absolute maximum move. 1.0 is equal. Anything above 1.0 suggests the implied move has a greater magnitude than the historical absolute maximum.
Notice: Dates listed on this report are provided by publicly-available announcements from the companies. In many cases, the dates are estimates, and they are subject to change at any time.
Hover over Event Title or Event Date for more details.
Click on the Expiration Date to be taken directly to the option chain for that expiration.
As of Friday Feb 23, 2024
Biotech stocks can be a good investment but you cannot have a discussion about biotech stocks without mentioning catalyst events. For biotech stocks, a catalyst event, such as the results of a clinical trial or a drug approval, can be the difference between a meteoric rise or collapse in the stock price. Therefore, a trader must know if any events are on the horizon. However, this is not an easy task. Scouring through the SEC filings and FDA calendars and countless websites that offer "advice" on biotech stock catalyst events can make any person feel mired in research. On this webpage, you can find the most pertinent data summed up in a way that highlights the information you need to know ahead of time. MarketChamleon.com compiles data about upcoming biotech catalyst events into one report that can be easily and quickly scanned. We use press releases, investor relation announcements, and governmental websites to get expected dates of announcements for potential catalysts which can lead to large stock moves.
Simply put, a catalyst event in a biotech stock is the difference between a great investment and a collasal failure. To think it in realtive terms, a biotech catalyst event is like an earnings announcement on steroids that comes out rarely. It's not unheard of to see above 100% stock price returns after the results of an FDA advisory board meeting or the initial results of clinical trials. This is a binary event that can cause a massive swing in the stock price and, for some stocks, that means it is make it or break it time. The greater the risk, the more substantial the reward. Traders absolutely CANNOT put on a position in stock or options without knowing that a crucial event is coming up.
To trade around a biotech stock catalyst event, you start by finding the event and then gathering as much information as you can to formulate an opinion. This page easily compiles what information you will need to get started. You can quickly find the stock information, the date and kind of potential catalyst event, the option contracts that are corresponding to the event and what the options market is predicting in the stock price move in comparison to historical moves. You can then use this information to evaulate an option trade.
For example, lets say company ABC has a biotech catalyst event happening a month from today. This page will show you how much open interest the market has received for the associated option contracts. Furthermore, you will see, based on forward looking options, what the market is expecting will be the stock price effect from the event. For instance, if the Implied Move is 60%, it means the options market is predicting that the stock price will move 60% either up or down as a result of the catalyst event.
More importantly, you can get a good idea of whether or not the options market is underpricing or overpricing the movement. When you compare the implied move to actual historical moves (based on 6 years of historical averages) you will clearly be able to see if the predicted movement is in line, way too high, or too low for the upcoming event. To make this clear, lets say, for company ABC, the implied move is 25% but the historical average moves has actually been 70%. This would imply that the market may be underpricing the catalyst event and a trader may decide to purchase a straddle in the corresponding options.
Prescription Drug User Fee Act: these are deadlines by which the FDA must review new drug applications.
Any one of 4 phases of biotech research investigations to test new experimetal drugs, treatments, cures, etc. in order to find the veracity to prevent, detect, treat or manage various diseases/medical conditions. Each phase can give a trader a good indication of how well the experiments are going.
Industry conferences can let a trader know where the demand is for novel diseases and how the industry as a whole is pursuing treatment or the direction of research biotechs are heading. Furthermore, industry conferences can reveal if there is an emergence in a new competivite drug.
While earnings tells a trader the health of a biotech, they can also reveal information about how well trials are going. Traders can look for hints or clues as to whether a company is anticipating good results based on fundamental data releases from an earnings report.
Similar to an earnings announcement, investor meetings are another avenue of information that a trader will use to gather any information that may tip them off as to the postive or negative sentiment in a company's upcoming biotech catalyst event.
Here is a video you can watch on how to use the biotech catalyst report.