Catalysts can create explosive moves, and our recent $HIMS trade perfectly illustrates how having positions in place before major news breaks can lead to exceptional returns. When entering positions based on technical setups, we never know exactly when news might emerge—or whether that news will be positive or negative.
In this case, we were positioned ahead of extremely beneficial news with the Novo Nordisk partnership announcement, but it’s always important to remember that unexpected news can cut both ways. This trade combined both common stock and options, allowing us to capitalize on the significant upside while managing risk through a defined plan.
The Setup
At 9:55 AM on Monday (4/28), I alerted the TW Elite community:
Shortly after, I initiated positions in both:
The initial setup was based on promising technical action, with HIMS showing relative strength and consolidating near important levels. Even before the news catalyst, the chart was suggesting potential for upside.
The Trade Plan
With positions established, I immediately outlined our complete plan:
Stop: ~$27 (below support)
Add: ~$28
Targets: $31.01, $33.70, $37.95
This structured approach gave us clearly defined exit points, regardless of direction.
Scaling In
As HIMS pulled back slightly to our add zone, we took the opportunity to improve our cost basis:
This average-in approach not only lowered our cost basis but also demonstrated confidence in our thesis despite some initial downside volatility.
The Catalyst Hits
Overnight, news broke that would send $HIMS soaring: a partnership with Novo Nordisk to market the blockbuster weight loss drug Wegovy. The collaboration would allow Americans to access NovoCare Pharmacy directly through the Hims & Hers platform, with a bundled offering of Wegovy and a Hims & Hers membership.
This was a game-changer for HIMS, as it transitioned from offering compounded knock-off versions of weight loss treatments (which they had discontinued after FDA announcements) to becoming an official partner with the maker of the leading weight loss drug in the market.
Managing the Position
With the stock gapping up significantly the next morning, it was time to start locking in profits:
By 10:54 AM on Tuesday, I decided to close the remainder of the calls to secure gains, noting:
“$HIMS Cut remainder of calls to lock in the win. Still in common stock and will give it a little more room. Want to see price hold ~$31 today (may look to roll up on calls there).”
Trade Results
This trade delivered exceptional returns in just two trading days:
Options (30C):
Common Stock:
When I closed a part of my position, $HIMS reached $40.12, representing a 39.83% gain for the day on heavy volume, confirming the significance of the Novo Nordisk partnership. As of May 5, 2025, I still have runners of $HIMS.
Why This Trade Worked
- Strategic timing: We established positions before the partnership announcement
- Dual approach: Using both common stock and options allowed us to benefit from the move while managing risk
- Clear plan: Having predetermined stop levels and profit targets eliminated emotional decision-making
- Proper scaling: Both on entry and exit, partial positions allowed for optimal risk management
- Catalyst confirmation: The Novo Nordisk partnership provided fundamental validation of our technical setup
Key Takeaways
This trade highlights the power of having a position in place when significant news breaks. While we couldn’t predict the exact timing of the Wegovy partnership announcement, our technical analysis suggested HIMS was poised for a move.
The combination of options and common stock provided leverage while maintaining staying power, and our disciplined approach to scaling in and out maximized the opportunity.
Remember that catalysts often create the largest moves in the market. When you combine technical setups with potential fundamental catalysts, you position yourself for exceptional risk/reward opportunities.
On to the next!