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Every now and then something hits my radar that’s a little outside the usual flow of setups I cover. This was one of those moments…
The play is Compass Pathways (CMPS), a company developing psychedelic mushroom therapy (COMP360) for depression.
The company announced Tuesday its Phase 3 COMP006 trial achieved its primary endpoint.
The data showed a statistically significant reduction in depression symptoms, measured by MADRS score, at week six.
That’s a major milestone and a critical step toward FDA approval, with management targeting a New Drug Application (NDA) submission in Q4.
Before the news, CMPS was trading around $5.80 on Friday. After the announcement, it surged to an intraday high above $7.80 — a roughly 34-40% move depending on how you measure it.
Then the company announced a $150 million public offering priced at $8 per share on Wednesday. That helps explain why the stock settled into the $7.60-$8.00 range shortly after the pop.
When a move starts with real clinical data and not hype, that’s when I pay attention. This one came straight off my AlphaFlow Dashboard.
The Setup I’m Using
With CMPS trading near $7.60 after the news, I stepped into the March 20 expiration, $8 strike calls around $1.30.
At that price, the break-even is $9.30 — the $8 strike plus the $1.30 premium. The elevated cost reflects high implied volatility, which is typical for a biotech immediately following Phase 3 results.
The March 20 $9 calls offer more leverage since they’re cheaper but further out of the money.
I like the balance of the $8 strike given the defined risk and responsiveness if buyers stay aggressive.
I’m keeping it simple here: Defined risk, clear catalyst and a chart that’s acting the way you want to see after strong data. There’s no need to overcomplicate it.
The Market Backdrop
This isn’t happening in isolation. Momentum has been rewarded across the board.
Caesars Entertainment (CZR) recently jumped from about $18.95 to $21.42 in a single session — a 13-14% gain that shows how quickly capital is rotating into strength.
When the broader tape is rewarding breakouts, fresh catalysts like CMPS can attract even more attention. That combination is what made this setup stand out to me.
I’m keeping the position tight and respecting the catalyst. If buyers stay engaged, there’s room for continuation.
If not, the risk is already defined.
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To better trading,
Alex Reid
WealthPin
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