Million Dollar Options Strategy Exposed

Learn how Nathan Bear went from struggling, small-business owner to Multi-Millionaire in a short period of time.

Join this exclusive session as Nathan shares the strategy that can help you potentially build life-changing wealth!

Trader Toolkit: Trading the Gap in Healthcare Stocks

Kyle DennisKyle Dennis ·

Ever look at a stock chart and see missing candle bars between days, or even intraday? Those are gaps.

What is a gap fill in stocks?

  • When a stock gaps up, that means it opened higher than it closed in the prior period; the opposite is true for gap downs.
  • Fill the gap is a strategy where you buy a stock when it gaps down and wait for prices to go up to “fill” the gap.
  • Gaps are due to a catalyst or news event, and halts trading while it is happening. It typically occurs premarket or during the after hours, but intraday gaps happen too.
  • Gaps are key regions that chartists like to look at for potential trades.

Gap fill stocks example

With that in mind, let’s look at an example of how to potentially trade a gap using basic support and resistance lines, and key levels.

For an example, look at this daily chart on Amphastar Pharmaceuticals Inc. (AMPH).

Source: TradingView

As noted here, the stock had two gaps down, each attributed to catalyst events. You could, therefore, potentially use these areas for trading; if a stock “fills” the gap, that means its price rises back to the level it maintained prior to the gap.

Thus, you could have potentially looked to buy and hold AMPH to play for gap fill stocks. Let’s assume you noticed the gap downs and saw how beaten up AMPH was, so you looked for a mean-reversion trade. Assume you got long the stock around $12.50 area.

Here’s a look at how that buy-and-hold swing trade would have worked out.

Source: TradingView

With biotech stocks, gap ups and gap downs occur after a catalyst event, such as data releases from clinical trials, or FDA approval announcements. Consequently, if you watch the chart around these events, you may find opportunities for gap-fill trades.

The Bottom Line

Gap fills have huge reward potential, if you get the timing right and are patient. Biotech and pharma are particularly ripe for gap-fill plays because the nature of their development processes creates catalyst events that can create gaps in the first place, but don’t just jump into any gap you see because not all of these voids get filled.


Kyle Dennis runs Kyle Dennis’ Biotech Breakouts ( He is an event-based trader, who prefers low-priced and small-cap biotech stocks.

Trending Now

Bull or Bear Market….It Doesn’t Matter

Kyle Dennis’ new, 5 min strategy is poised to double account sizes weekly! “I got out of GE trade at 379% $0.16-$0.77, thanks Kyle!” Said client Lance P. Check out the free training that started it all. (View Free Training)

SuperNova Service Leading Clients to 5-Figure Profits Consistently

“BOOM!!! Booked another $13,985 in profits on my long position $VMNGF. Great report came out premarket. Thanks Jeff at SuperNova for teaching me to make $$$ in the market.” Said Todd V. Jeff Williams is helping transform small accounts daily. Don’t miss his free walkthrough. (Watch Now)

Jeff Bishop, Co-Founder, “Trading My Strategy Takes A Few Minutes a Day!” 

“Jeff, I have to say I was a little gun shy, but I bought the lifetime service (to Bullseye Trades) Friday night. First trade with your service…in LULU, 205 Calls at $4.70. (I) was going to be away from all internet connections for the next 3 days. It hit my sell price at $6.25 ;)” said James W.    (Read More)

Be a Better Stock Trader, Starting Today

Get the expert insights, tips and strategies you need to optimize your trading skills and profiles