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How to Trade Large-Impact Catalysts for Huge Market Returns

Written by Sean McCloskey
Posted August 27, 2021

Select healthcare and biotech stocks are paying out big-time this year, and it’s not just because of COVID-19 and its many variants.

Take Trillium Therapeutics (NASDAQ: TRIL) for example. This struggling stock broke out and soared 187% after pharmaceutical giant Pfizer Inc. (NYSE: PFE) announced it will buy out the company for the hefty price tag of $2.6 billion.

Trillium 5 Day


Andy Schmeltz, global president and general manager of Pfizer Oncology, notes in a press release confirming the acquisition: 

Today’s announcement reinforces our commitment to pursue scientific breakthroughs with the addition of potentially best-in-class molecules to our innovative pipeline. The proposed acquisition of Trillium builds on our strong track record of leadership in Oncology, enhancing our hematology portfolio as we strive to improve outcomes for people living with blood cancers around the globe. Our deep experience in understanding the science of blood cancers, along with the diverse knowledge base we have developed across our growing hematology portfolio of eight approved and investigational therapies, provide us with a foundation to advance these important potential medicines to patients who need them.

Timing Is Everything When Trading Biotech for Big Gains

Traders who scored 187% gains on Trillium can chalk up their win to great timing.

Since reaching all-time highs last December, the stock has been in a downtrend up until this week. Investors who bought at the top eight months ago may be sitting on a small gain at best. However, investors who added TRIL to their portfolio in the past few months — recognizing the fact that this stock was trading at a significant discount to its true value and a perfect buyout candidate — made a killing.

More importantly, the timing of this trade revolved around a single catalyst — a buyout. If you take anything away from this article today, make sure it’s this.

To successfully trade biotech, it’s all about timing your trade around the right catalyst.

Now admittedly, it’s been a while since I personally have focused on biotech stocks, but let’s look at another example my followers capitalized on a few years back when I was still knee-deep in the sector.

On April 5, 2018, I recommended a lesser-known biotech formerly named Seattle Genetics, now named Seagen Inc. (NASDAQ: SGEN), at a price of $53.38. By the end of the year, the stock had nearly doubled in value after rising over $80 per share.

Shareholders who took my advice scored a 60% gain in only eight months! 

SGEN 2018 Gains

The catalyst back in 2018 was an FDA approval on Seagen's Adcetris therapy for the treatment of Hodgkin's lymphoma. More specifically, this therapy represented the first FDA-approved regimen for frontline treatment of Stage 3 and 4 Hodgkin's lymphoma in over 40 years. 

That’s an incredibly significant single-event catalyst.

And almost every week there are catalysts like the ones mentioned above for us to profit from. 

Take for example my colleague and fellow analyst Keith Kohl’s latest trade on Cara Therapeutics Inc. (NASDAQ: CARA).

Keith identified a large-impact catalyst that was set to trigger on August 23, 2021. 

Cara Therapeutics’ New Drug Application for its Korsuva injection was set for an FDA decision with a strong likelihood of approval (and a surge in the stock price), so Keith issued a buy alert on Cara on August 16. 

Following the large-impact catalyst he had anticipated, shares of Cara popped, offering followers of Keith's Topline Trader service the potential to lock in flash one-week gains as high as 45% before shares fell back down to Earth while investors took profits.

As I said before, timing is everything. 

But with the right guidance and insights into the hundreds of catalysts out there during any given week, you could score a gain like this almost every week of the trading year.

It’s simply one of the best ways to build your wealth with stocks and in relatively no time at all compared with other stocks and investment vehicles.  

Catalyst Trading in Biotech Could Offer Incredible Returns

On any given day, the biotech sector has the potential to hand out the biggest, fastest gains of any sector. In fact, almost every day, one of the market's biggest winners will be an obscure biotech no one has ever heard of.

This Monday it was Trillium. On Thursday it was Ascendis Pharma (NASDAQ: ASND), which soared 23% in early trading thanks to another large-impact catalyst. On Friday I'm sure we'll see another biotech pop for huge returns.

Of course, timing is everything when trading around these large-impact catalysts, and you have to get in before the mainstream gets wind of them. 

The good news is I can virtually guarantee that next week another little-known biotech could soar for huge gains as well.

That’s why catalyst trading is so great for investors. It offers fast-moving trades with incredible upside that you can take advantage of almost every week — week after week and year after year.

To your wealth,

Sean McCloskey
Editor, Energy and Capital

follow basic@TheRL_McCloskey on Twitter

After spending 10 years in the consumer tech reporting and educational publishing industries, Sean has since redevoted himself to one of his original passions: identifying and cashing in on the most lucrative opportunities the market has to offer. As the former managing editor of multiple investment newsletters, he's covered virtually every sector of the market, ranging from energy and tech to gold and cannabis. Over the years, Sean has offered his followers the chance to score numerous triple-digit gains, and today he continues his mission to deliver followers the best chance to score big wins on Wall Street and beyond as an editor for Energy and Capital.

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