Approaching catalyst events

Catalyst trading is inherently high-variance: a single binary event can double or halve a stock overnight. This is a framework for thinking, not advice.

Principles

• Position size for the worst case — a single-asset Phase 3 can go to near-zero on a miss.
• Know what's priced in — a big run-up means even good news can fade (sell the news).
• Separate the company from the trade — a great drug can still be a bad trade if expectations are sky-high.
• Watch the balance sheet — a spike on news is often met with an offering days later.
• Beware illiquidity — thin names gap straight through stop-losses.

Not financial advice. Binary biotech events can result in total loss; never risk more than you can afford to lose.