Trade Alert: Pharma Panic

Bullish options trades on a midcap plummeting today, and one on a moonshot.

The Pharma Panic Yesterday That Wasn’t…

After President Trump announced on Sunday that he’d be signing an executive order on drug pricing on Monday, I expected pharma stocks to open in the red. But the relief rally from the 90-day truce in the U.S.-China tariff war lifted even pharma names.

…But Was Today

At least in one name, the “Company A”, I had written this stock before today:

Company A

This is a biotech stock with the following ratings via Chartmill (these are all on a 0-10 scale, except for the Piotroski F-Score, which is on a 0-9 scale, with 9 being the best).

• Overall technical: 10

• Overall fundamental: 8

• Profitability: 8

• Health: 8

• Growth: 8

• Valuation: 9

• F-Score: 9

This stock beat on top and bottom lines when it reported its earnings this month.

• How I’m playing it

  • Bull‑put credit spread: Taking advantage of expensive puts to collect a net credit which we'll get to keep if the stock doesn't fall further over the next few months.

  • Equity kicker: Allocate part of that credit to Jan 2026 OTM calls. Theta from the spread finances the lottery ticket.

That company dropped 25% today, on a downgrade based on some potentially negative regulatory news, but that looks like an overreaction. The options strategies I mentioned above still make sense here, just at lower strikes.

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Company B – The Diabetes Moonshot

This one is a pure speculative bet—but with asymmetric payoff.

• Catalyst

  • First‑in‑human trial just made its debut participant insulin‑independent after 30 years of Type‑1 Diabetes. Not only doesn't he need to take insulin, but he doesn't need to take any immunosuppressant drugs either. No safety issues so far. We bought shares of this one when the initial news came out early this year, but the company just mentioned that this individual has gone a few more months with no reported issues.

• Risk

  • Biology can always surprise.

  • FDA hurdles, capital raises if share price pops.

• How I’m playing it.

  • Unlike earlier this year, this name now has options traded on it. I’m buying January 2027 calls on it.

Details on both names and trades are below.

And if you'd rather limit your risk here, you can download the Portfolio Armor app by aiming your iPhone camera at the QR code below (or by tapping here, if you're reading this on your phone).

Company A Trade #1