CYTK Rallies 82% Following Unusual Options Activity – Beragampengetahuan

Today, shares of CYTK gapped up in a big, big way. Healthcare stock Cytokinetics released news that their heart drug, Aficamten, had been successful in its most recent trial. Aficamten was shown to improve patients’ exercise capacity, increased peak oxygen capacity, and is now being considered by some analysts to be the “best in class” drug of its kind. As a result, the stock rallied more than 82% on the news today alone.

The question we’re wondering:

Did someone know the results of this test ahead of time?

On December 11th, Market Rebellion’s unusual options activity service alerted Rebels to a peculiar and far out of the money trade in CYTK. With the stock trading at just $33.73 per share, this trader was risking nearly half a million dollars on a bet that this stock would double within a month’s time — and they used vertical call spreads to do it. 

In a vertical call spread, the buyer is making a bullish prediction about the stock price, however their maximum gain is capped at the “short leg” of the spread. In this case, this buyer bought the $60 strike calls and sold the $75 strike calls to form this spread, meaning the maximum amount of money they could make on this spread was $15.00 ($1,500). However, they only risked $1.45 ($145) per spread to make this trade. That trade turned out to be right on the money, as today, this trade looks like it will expire at maximum value (more than 10X) on January 19th if CYTK continues to trade above $75. It’s currently trading at $83.53. 

This drug trial has even sparked rumors of a potential buyout of CYTK. As for our prior question about whether or not someone knew something ahead of time and traded this based on insider information — we don’t know, and we likely will never know. Luckily for us, that’s not important. Unusual options activity is public information. That means we’re completely within our right to trade on it. It’s how we follow the “smart money,” and it’s yielded us some incredible results.

If you’re interested in getting UOA alerts like these, along with professionally crafted trade ideas based around them, try Unusual Options Activity below.