Why Some Trades Are Worth Another Swing
Looking Beyond A Broken Chart
Last Friday, Capricor Therapeutics (CAPR 0.00%↑) was trading near $4 after falling nearly 80% from its July 24th close. We entered an options trade on it then, as we detailed in this alert:
This was the structure we presented to subscribers, with the FDA’s August 22nd action date for Deramiocel, its experimental treatment for Duchenne muscular dystrophy, in mind:
The technicals at the time were terrible, as you can see above. An RSI (Relative Strength Index) below 30 is usually considered oversold; CAPR had an abysmal RSI of 12. And on a scale of 0-to-10, with 0 being the absolute worst, CAPR had a Chartmill technical rating of 0.
CAPR remained a high-risk biotech binary. An FDA advisory committee had voted 9–3 against approval for the cardiomyopathy indication, but the company’s Phase 3 trial had met its primary endpoint in upper-limb function. Our trade structure preserved exposure to a favorable surprise while capping the loss from another collapse.
On last Thursday’s earnings call, Capricor said it planned to amend its biologics license application with 24-month extension data and additional analyses supporting a refined upper-limb indication. The FDA indicated that it was willing to review the amendment and extend the action date after receiving it. CAPR spiked 58% on Friday on that news.
At Friday's closing price, our CAPR options trade was on track for an even larger gain.
Why We Keep Following Multibaggers
CAPR illustrates the potential value of our Multibaggers list, a subset of our Market Watchers X list composed of accounts with multiple 100%+ winners. The list supplies potential alpha; our technical screens, catalyst work, options structures, and price discipline determine when and how we act on it. That's why we're taking another swing at a Multibagger name today, whose trade didn't fill last week, a psychedelic-therapy developer preparing a global pivotal program after a successful Phase 2b trial.
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Afternoon Update
Today's trade alert: