How should I adjust my position sizing or stop‑loss strategy for HIMS in light of this news?

Actionable Take‑aways

The securities‑fraud lawsuit is a high‑impact, negative catalyst (sentiment –70) that will likely trigger a sharp, short‑term sell‑off and heightened volatility in HIMS. In a market where the stock is already priced for risk‑off sentiment, the immediate priority is to protect capital rather than to chase a potential rebound.

1. Position sizing – If you are already long, cut the exposure to no more than 1–2 % of your total portfolio (or 25‑30 % of the original HIMS stake) until the price stabilises. If you are a short‑term trader, consider scaling in a modest short position rather than a full‑size bet, given the risk of a “buy‑the‑dip” rally if the company manages to contain the fallout.

2. Stop‑loss tightening – The typical ATR‑based stop (e.g., 2 × ATR) is now too wide. Move to a tight 5‑7 % trailing stop (or a fixed $‑level stop just above the recent swing high) to capture the downside quickly while still allowing room for normal volatility. For shorts, set a protective stop 4‑5 % above the entry to guard against a short‑cover rally if the news is absorbed and the stock finds a floor.

3. Volatility buffer – Expect a rise in the VIX‑type implied volatility for HIMS options. If you keep a position, consider buying a tight‑range protective put (e.g., 1‑2 % OTM) to hedge the downside while you wait for the price to settle. Conversely, if you are short, a small‑size call‑write can offset the cost of the higher premium.

Bottom line: Reduce your HIMS exposure, tighten stops to 5‑7 % (or a tighter ATR‑based level), and use a modest hedge (protective put or call‑write) to manage the amplified risk until the lawsuit’s market impact is fully priced in.