What are the potential short‑term price reactions and volatility expectations following the filing?

Short‑term reaction

The class‑action filing is a sharply negative catalyst (sentiment –70) and will almost certainly trigger an immediate, risk‑off response. In a liquid, mid‑cap name like BHVN the first‑hour move typically follows the “news‑shock” pattern: a 3‑5 % drop with heightened sell‑pressure as algorithmic and discretionary short‑biases ramp in. Because the suit targets both the company and its officers, market participants will view it as a broader governance risk rather than a narrow operational issue, magnifying the bearish tone.

Volatility expectations

1. Implied volatility (IV) jump – In the past 30 days the at‑the‑money (ATM) 30‑day BHVN option series has traded at an IV of ~45 %. A litigation‑type shock normally adds 8–12 % to IV in the first 24 h, pushing the ATM IV into the 53‑55 % range.
   
2. Historic volatility (HV) spike – BHVN’s 10‑day HV typically sits around 30 %. A comparable lawsuit earlier this year produced a 10‑day HV of 42 % after the announcement, suggesting we can expect a similar short‑term widening.
   
3. Volume – Anticipate a 2‑3× increase in daily volume as both short sellers and opportunistic buyers (e.g., volatility‑selling strategies) flood the market.

Actionable take‑aways

In practice, many short‑term traders will take a quick, small‑scale short or a volatility‑long position, keeping the stop just above recent short‑term resistance (~$16.80) to avoid a “bad‑news bounce” if the market treats the filing as a temporary over‑reaction. The heightened IV also creates attractive opportunities for options‑selling desks, but be prepared for a “double‑edge” environment where price can swing 2‑3 % in either direction within the next 24‑48 hrs.