Soleno Therapeutics Plunges 9.47%—What’s Behind the Selloff?

Summary
• Soleno Therapeutics (SLNO) slumps to $70.03, down 9.47% intraday
• Intraday range spans $63.46–$70.26, signaling extreme volatility
• Scorpion Capital’s short report targets Vykat XR’s safety profile

Today’s dramatic selloff in Soleno Therapeutics has sent shares reeling after a short-seller report raised safety concerns over its FDA-approved drug Vykat XR. The stock’s 9.47% drop has erased 11% of its market cap in under four hours, with technical indicators and options activity pointing to a bearish breakdown. As the biotech sector remains mixed, investors are now scrutinizing the drugmaker’s regulatory exposure and pipeline diversification.

Regulatory Scrutiny and Safety Allegations Trigger Sharp Selloff
Scorpion Capital’s bearish report, disclosed on August 15, directly targeted Soleno’s Vykat XR, alleging risks of fluid buildup and heart failure in patients. The short-seller drew parallels to Zafgen’s 2015 collapse after trial-related deaths, amplifying investor anxiety. While Soleno has not publicly responded, the report’s timing—just weeks after FDA approval—has intensified scrutiny. The lack of a diversified pipeline and patent expiration in 2026 further justify the bearish thesis. This regulatory and clinical uncertainty has triggered a liquidity crunch, with the stock trading below its 200-day moving average of $63.21.

Biotech Sector Volatility Intensifies as SLNO Underperforms Peers
The biotech sector (XBI: +0.45%) remains mixed, with Amgen (AMGN) rising 1.01% as a sector leader. However, Soleno’s 13.9% drop starkly contrasts with peers like Apellis Pharmaceuticals (APLS, +3.55%) and Rhythm Pharmaceuticals (RYTM, -0.12%). The divergence highlights Soleno’s vulnerability to safety-related short-seller attacks, particularly for single-asset biotechs. While the sector’s long-term growth remains intact, Soleno’s lack of a diversified pipeline and regulatory exposure make it a high-risk play.

Bearish Put Spikes and Technical Breakdowns Signal Aggressive Shorting Opportunities
• MACD: -0.749 (bearish divergence), Signal Line: -0.003, Histogram: -0.746 (deepening bearish momentum)
• RSI: 33.85 (oversold but not a buy signal), Bollinger Bands: $63.46–$67.36 (price near lower band)
• 200-day MA: $63.21 (price below, bearish signal)

Technical indicators confirm a breakdown in Soleno’s price structure, with RSI near oversold levels and MACD in bearish territory. The stock’s 13.9% drop has triggered a surge in put options, particularly the SLNO20250919P75 and SLNO20250919P70 contracts. These options offer high leverage (6.26% and 9.96%) and implied volatility above 70%, reflecting market anticipation of further downside. The 200-day MA at $63.21 and Bollinger Band support at $63.46 are critical levels to watch for a potential rebound or continuation of the selloff.

Top Put Option 1: SLNO20250919P75
• Code: SLNO20250919P75, Type: Put, Strike: $75, Expiry: 2025-09-19
• IV: 82.58% (high volatility), Leverage: 6.26%, Delta: -0.582 (moderate sensitivity), Theta: -0.0357 (moderate time decay), Gamma: 0.0220 (responsive to price moves), Turnover: 121,400 (high liquidity)
• Payoff Estimation: At a 5% downside (ST = $63.3), Put Payoff = max(0, $75 - $63.3) = $11.7 per contract. This option offers a 187% return if the stock breaks below $63.46.
• Why It Stands Out: High IV and leverage amplify returns in a bearish scenario, while moderate delta ensures it remains sensitive to price drops without excessive time decay.

Top Put Option 2: SLNO20250919P70
• Code: SLNO20250919P70, Type: Put, Strike: $70, Expiry: 2025-09-19
• IV: 71.87% (mid-range volatility), Leverage: 9.96%, Delta: -0.488 (moderate sensitivity), Theta: -0.0376 (moderate time decay), Gamma: 0.0258 (responsive to price moves), Turnover: 28,960 (solid liquidity)
• Payoff Estimation: At a 5% downside (ST = $63.3), Put Payoff = max(0, $70 - $63.3) = $6.7 per contract. This option offers a 103% return if the stock breaks below $63.46.
• Why It Stands Out: Strong gamma and leverage make it ideal for a short-term bearish trade, with sufficient liquidity to enter/exit positions.

If $63.46 breaks, SLNO20250919P75 offers a high-leverage short-side play. Aggressive bulls may consider SLNO20251017C70 into a bounce above $66.60.

Backtest Soleno Therapeutics Stock Performance
The SLNO ETF has demonstrated a positive performance following a -9% intraday plunge. The 3-day win rate is 49.20%, the 10-day win rate is 50.48%, and the 30-day win rate is 53.86%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest period was 14.53%, which occurred on day 59, suggesting that SLNO can recover from significant intraday declines.

Short-Term Bearish Bias Intensifies; Watch for Regulatory Clarity or 200-Day MA Breakdown
The selloff in Soleno Therapeutics reflects a perfect storm of regulatory skepticism, safety concerns, and a lack of pipeline diversification. While the stock’s long-term bull case hinges on Vykat XR’s market adoption, the immediate outlook remains bearish, with technical indicators and options activity pointing to further downside. Investors should monitor the 200-day MA at $63.21 and the 2025-09-19 put options for potential entry points. Meanwhile, sector leader Amgen (AMGN, +1.01%) continues to outperform, offering a safer alternative for risk-averse biotech investors. Action Alert: Watch for a breakdown below $63.46 or a regulatory response from Soleno to gauge the selloff’s sustainability.