Viking Therapeutics Soars 12.5% on Regulatory Tailwinds and Relative Strength Surge: Is This the Catalyst for a Biotech Breakout?

Summary
• Viking Therapeutics (VKTX) surges 12.48% to $39.83, hitting a 52-week high of $39.99
• FDA's one-pivotal-study approval rule sparks biotech sector optimism
• Relative Strength rating jumps to 81, signaling renewed institutional interest
• Options volume surges 359% on Tuesday, with 88,534 calls traded

Viking Therapeutics is experiencing a dramatic reversal as regulatory tailwinds and a bullish technical shift converge. The stock's 12.5% intraday rally—its largest single-day gain since August—has been fueled by the FDA's revised approval pathway for biotech drugs and a 7-point surge in its Relative Strength rating. With the stock trading near its 52-week high and options volatility spiking, investors are scrambling to position for a potential breakout in the obesity drug space.

Regulatory Tailwinds and Relative Strength Upgrade Ignite Biotech Rally
The surge in VKTX is directly tied to the FDA's recent announcement requiring only one pivotal study for drug approvals, a policy shift that disproportionately benefits biotech firms with late-stage candidates. This regulatory easing, combined with Viking's upgraded Relative Strength rating from 75 to 81, has reignited investor confidence. The stock's 12.5% gain follows a 39% sell-off in August triggered by mixed trial data for its obesity drug VK2735, but the recent news about streamlined FDA requirements has recalibrated risk-reward dynamics. Institutional buyers are now prioritizing Viking's pipeline, particularly its subcutaneous formulation of VK2735, which remains on track for phase 3 trials.

Biotech Sector Gains Momentum as Regulatory Tailwinds Broaden
The broader biotech sector is participating in the rally, with sector leader Eli Lilly (LLY) down 1.79% despite its GLP-1 dominance. While Lilly's decline reflects pricing pressures in the obesity drug market, Viking's surge highlights the sector's bifurcation between established players and late-stage innovators. The FDA's one-pivotal-study rule is expected to accelerate approvals for smaller biotechs like Viking, creating a favorable environment for pipeline-driven stocks. This regulatory shift is also pressuring clinical research organizations like Medpace and IQVIA, which could see reduced demand for multi-study trials.

Options Playbook: Capitalizing on Viking's Volatility with Gamma-Driven Calls
• 200-day MA: $29.74 (well below current price)
• RSI: 30.47 (oversold territory)
• MACD: 0.058 (bullish crossover potential)
• Bollinger Bands: Price at $39.83 (near upper band of $40.88)

Viking's technicals suggest a continuation of its short-term bullish momentum. The stock is trading above both its 50-day ($31.17) and 200-day ($29.74) moving averages, with RSI in oversold territory indicating potential for further gains. The options market is pricing in significant volatility, with the top two call options exhibiting high gamma and theta, making them ideal for a short-term breakout trade.

Top Option 1: VKTX20251212C38.5
• Contract Code: VKTX20251212C38.5
• Type: Call
• Strike Price: $38.50
• Expiration: 2025-12-12
• IV: 89.77% (high volatility)
• Leverage Ratio: 14.14%
• Delta: 0.608 (moderate sensitivity)
• Theta: -0.215 (rapid time decay)
• Gamma: 0.0688 (high sensitivity to price changes)
• Turnover: 112,069 (liquid)

This call option offers a balance of leverage and liquidity, with high gamma ensuring rapid premium growth if the stock breaks above $38.50. Projected payoff at 5% upside ($41.82) would yield $3.32 per contract, a 289% return on the $1.15 premium.

Top Option 2: VKTX20251212C39.5
• Contract Code: VKTX20251212C39.5
• Type: Call
• Strike Price: $39.50
• Expiration: 2025-12-12
• IV: 84.77%
• Leverage Ratio: 18.33%
• Delta: 0.536 (moderate sensitivity)
• Theta: -0.202 (rapid time decay)
• Gamma: 0.0754 (high sensitivity)
• Turnover: 11,744

This contract provides higher leverage (18.33%) with comparable gamma (0.0754). At a 5% price move, the payoff would be $2.32 per contract, a 232% return on the $1.00 premium. The higher strike price aligns with Viking's current price level, making it ideal for aggressive bulls.

Trading Setup: Key support at $34.80 (intraday low) and resistance at $40.88 (Bollinger upper band). A break above $40.88 could trigger a retest of the 52-week high at $51.68. Given the sector's regulatory tailwinds and Viking's pipeline visibility, consider a bullish calendar spread using the 38.5 and 39.5 calls to capitalize on volatility expansion.

Backtest Viking Therapeutics Stock Performance
I attempted to generate the event-date file automatically but the calculation step failed because the “12 % intraday surge” rule still needs to be translated into an explicit formula the system can apply to the raw price series. To move forward, I just need to confirm exactly how you’d like to define the “12 % intraday surge”. The three most common definitions are:1. High vs. Open: (High − Open) / Open ≥ 12 % • Captures days when the price reached a peak at least 12 % above the opening price.2. Close vs. Open: (Close − Open) / Open ≥ 12 % • Focuses on days that finished ≥ 12 % higher than the open (strong close).3. Close vs. Previous Close: (Close − Prev Close) / Prev Close ≥ 12 % • Uses the standard daily return measure.Please let me know which definition you prefer (or provide another formula). Once confirmed, I’ll regenerate the event list and complete the back-test of VKTX performance from 2022-01-01 to today.

Viking Therapeutics at Inflection Point: Regulatory Catalysts and Technical Momentum Align
Viking Therapeutics is at a critical juncture where regulatory tailwinds, technical momentum, and institutional sentiment converge. The FDA's one-pivotal-study rule and upgraded Relative Strength rating have created a powerful catalyst for a biotech rebound. With the stock trading near its 52-week high and options volatility spiking, the next 72 hours will be pivotal. Investors should monitor the $40.88 Bollinger upper band and $38.50 strike price as key decision points. Sector leader Eli Lilly's -1.79% decline underscores the market's bifurcation, but Viking's pipeline visibility and regulatory tailwinds position it as a breakout candidate. Act now: Buy the 38.5 call for a 289% payoff potential if $41.82 is reached by expiration.