Tricida, Inc. (TCDA) | Options Trade Idea

Tricida, Inc. (TCDA) Overview

• Tricida, Inc. (TCDA) focuses on developing and commercializing veverimer (TRC101), a non-absorbed orally-administered polymer that has completed Phase III trial to treat metabolic acidosis in patients with chronic kidney disease by binding and removing acid from the gastrointestinal tract.
• The company has been working in response to the FDA’s Complete Response Letter (CRL) asking for more data.
• The good news (according to the company) is that it already has collected most of the data being asked from a prior trial to respond to the CRL so it is terminating the existing trial earlier.
• This will save capital and possibly commercialize the treatment earlier than expected.
• The Read-out for the trial is expected by the end of this year. (The readout is essentially when the results of a clinical trial are made public).

Information source

Tricida, Inc. (TCDA) Technical and Fundamental Analysis

• TCDA is trading at around $9.
• The IV % Rank is close to 100% right now (red box image below) in anticipation of the trial read-out.
• The IV itself is at around 3.8, which is extremely high.
• $5 support line.
• Significant recent insider buying and selling.
• The company is low on cash.

TCDA chart

TCDA insider buying

Options Trade Idea

Open a reverse diagonal spread by buying a $2.5 strike, 21 Oct 22 expiration, and selling a $5 strike, 18 Nov 22 expiration Put (first image below).

Netting about $1.8 credit.

In theory, it’s equivalent to risking $70 to make $180 per contract if all goes well (second image below).

If the read-out does not happen by Oct expiration, take the theta profit and open a new position with Nov 22 and Dec 22 expiration Put.

TCDA options chain

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Tony

I have been trading options since 2010 and have been testing and experimenting with various trading styles. Fundamental Analysis based, Technical Analysis based, Trend Following, Day Trading, Swing Trading, etc.

My primary option trading strategies incorporate volatility and I am constantly experimenting with various trading strategies to improve my PNL.

I hold two Master’s degrees (MSc and MBA) with career experience as a cancer research scientist and a digital marketer.

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