Why I Opened This New Biotech Position
Here’s an option strategy for the name.
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It has been an eventful week.
The October PPI and CPI readings showed the Federal Reserve still has a long way to go to get inflation down to its official 2% target. A rate hike is very likely at the December FOMC meeting.
The CEO of NVIDIA Corporation (NVDA) stepped down due to a growing scandal. This saga is nowhere near to be being over as questions about how the company might have helped circumvent sanctions on China and how this change will alter NVIDIA’s significant contribution to the circular financing that has become endemic across the AI ecosystem. Next week, headlines will be dominated by the upcoming IPO of Anthropic (ANT).
Fortunately, my portfolio has very little exposure to AI-related plays and was in the green on Friday even as the market fell to close the week. In this weekend’s covered call trade idea, I highlight a new biotech position in my portfolio. It is a small holding, for now. The liquidity in the options is not where I would like it to be. However, the option premiums are more than lucrative to set up an initial covered call order.
The name of the company is Corvus Pharmaceuticals, Inc. (CRVS). Shares of this immunotherapy concern have been cut in half since it executed a January 2026 secondary offering after posting positive data for its lead (and only) asset soquelitinib. The selloff is mostly a function of a news vacuum that is about to change in 2027. The company and its partner Angel Pharmaceuticals will be providing data from four clinical trials while initiating two additional studies. With a chance to “reset” the immune system by modulating a broad array of cytokines through a novel mechanism of action, Corvus is pursuing an interesting opportunity.
With the ability to immunomodulate a broad spectrum (at least nine) of cytokines responsible for autoimmunity, allergies and malignancies, soquelitinib differentiates itself from other immunotherapies such as AbbVie’s (ABBV) mega-blockbuster Janus kinase inhibitor Rinvoq (upadacitinib), which only modulates a total of four cytokines (IL-4, IL-13, IL-21, and IL-31) yet is approved for nine immunological indications. As such, Corvus has identified 17 immune diseases against which it believes its candidate could be effective, representing a total addressable market of at least $100 billion.
This is one reason why analyst firms are very positive on the company’s prospects even as most of its development efforts are early stage. The stock trades at just under $11.00 a share and sports an approximate $900 million market capitalization. As previously stated, the stock has drifted down within a news vacuum in recent months. This will change in the coming year.
This starts with a PTCL Phase 3 trial futility analysis and Phase 2 asthma trial initiation in 1Q27, likely concurrent to or followed by initial AD data from Angel Pharma and HS data from Corvus. The second half of 2027 will feature SIERRA1 top-line results and more AD data from Angel, followed by Phase 3 results from the PTCL study (assuming no futility in 1Q27). In short, there are plenty of potential catalysts ahead.
Option Strategy
This is how one can initiate a holding in CRVS with a covered call order. As a reminder, covered call orders involve buying an equity and simultaneously selling just out of the money call strikes against the new position.
Using the April $10 call strikes, fashion a covered call order with a net debit in the $7.60 to $8.00 a share range (net stock price – option premium).
This strategy provides downside protection of just over 25% with upside potential of 28% even if the stock falls 6% from here over the option duration.
At the time of publication, Jensen was long CRVS.
