Viking Therapeutics Plunges 8.6% Amid Volatile Intraday Selloff – What’s Fueling the Turbulence?

Summary
• Viking Therapeutics (VKTX) slumps 8.6% to $32.375, its lowest since January 2024
• Sector leader Johnson & Johnson (JNJ) declines 1.73%, signaling broader pharma sector weakness
• Technical indicators show RSI at 40.13 (oversold) and MACD (-0.104) in bearish territory

Today’s dramatic selloff in VKTX reflects a confluence of sector-wide pressure and technical exhaustion. With the stock trading near its 52-week low of $18.92 and Bollinger Bands tightening, traders are scrambling to decipher whether this is a short-term correction or a deeper bearish shift. The pharma sector’s mixed performance and elevated volatility in options markets add layers of complexity to the unfolding narrative.

Pharma Sector Pressure Weighs on VKTX Amid Broader Market Weakness
The sharp intraday decline in VKTX aligns with a broader selloff in the pharmaceutical sector, as evidenced by Johnson & Johnson’s 1.73% drop. While no company-specific news triggered the move, technical indicators suggest exhaustion in the stock’s short-term momentum. The RSI at 40.13 signals oversold conditions, while the MACD (-0.104) and negative histogram (-0.111) confirm a bearish crossover. Additionally, the price has pierced below the 30-day moving average (35.99) and is now testing the 200-day average (30.46), amplifying near-term bearish sentiment.

Pharma Sector Suffers as JNJ Drags Down Peers
The pharmaceutical sector is under pressure, with Johnson & Johnson’s 1.73% decline acting as a catalyst for broader weakness. While VKTX’s 8.6% drop far outpaces JNJ’s move, the sector’s mixed performance highlights a risk-off environment. Investors are rotating out of biotech names amid macroeconomic concerns, with VKTX’s high leverage (-13.6x P/E) making it particularly vulnerable to volatility. The sector’s underperformance underscores the importance of monitoring JNJ’s trajectory as a barometer for pharma market sentiment.

Options Playbook: Capitalizing on Volatility with High-Leverage Puts
• 200-day average: 30.46 (below current price)
• RSI: 40.13 (oversold)
• Bollinger Bands: 33.75–39.07 (price near lower band)
• MACD: -0.104 (bearish)

With VKTX trading near critical support levels and options volatility surging, aggressive short-term strategies gain traction. The 200-day average at $30.46 and Bollinger Band lower bound at $33.75 form a key battleground. For leveraged exposure, two options stand out:

• VKTX20260109P31.5 (Put, $31.5 strike, Jan 9 expiry):
- IV: 73.26% (high)
- LVR: 47.71% (moderate)
- Delta: -0.347 (moderate sensitivity)
- Theta: -0.0026 (low decay)
- Gamma: 0.1328 (high sensitivity to price moves)
- Turnover: 21,788 (liquid)
This contract offers a 47.7x leverage ratio with high gamma, ideal for capitalizing on a 5% downside move (projected price: $30.76). Put payoff would be $0.74 per share, translating to a 151.85% gain if the price hits $30.76.

• VKTX20260109P31 (Put, $31 strike, Jan 9 expiry):
- IV: 69.51% (high)
- LVR: 70.52% (high)
- Delta: -0.272 (moderate sensitivity)
- Theta: -0.0098 (moderate decay)
- Gamma: 0.1258 (high sensitivity)
- Turnover: 7,587 (liquid)
This put offers 70.5x leverage with strong gamma, making it a top pick for a bearish breakout. A 5% drop would yield a $1.31 payoff per share, reflecting a 19.3% price decline from current levels.

Aggressive bears should prioritize VKTX20260109P31.5 for its high gamma and liquidity, while VKTX20260109P31 provides a balanced risk-reward profile. If the $30.46 200-day average breaks, these puts could unlock outsized returns.

Backtest Viking Therapeutics Stock Performance
The backtest of VKTX's performance after a -9% intraday plunge from 2022 to now shows favorable results. The 3-Day win rate is 48.41%, the 10-Day win rate is 52.38%, and the 30-Day win rate is 52.58%, indicating that VKTX tends to rebound in the short term. The maximum return during the backtest was 21.12% over 30 days, suggesting that while there is volatility, significant gains are possible in the following days after a sharp drop.

Act Now: Position for a Potential Pharma Sector Rebound or Further Downtrend
The immediate outlook for VKTX hinges on its ability to hold above the $30.46 200-day average and the $33.75 Bollinger Band lower bound. A breakdown below $30.46 would validate a deeper bearish shift, while a rebound above $35.38 (30D support) could spark a short-term bounce. Investors should closely monitor Johnson & Johnson’s performance as a sector proxy—its 1.73% decline today highlights systemic risk. For directional bets, the selected puts offer high leverage and liquidity, but only if the $32.38 price remains below the 30-day average. Watch for a $30.46 breakdown or regulatory catalysts to dictate next steps.