Bitcoin mining company Riot Platforms (RIOT) is starting to trend higher as bitcoin prices trend higher. One trader is betting that shares will keep trending higher.
That’s based on the December $11 calls. With 328 days until expiration, 41,425 contracts traded compared to a prior open interest of 104, for a massive 398-fold rise in volume on the trade. The buyer of the calls paid $1.26 to make the bullish bet.
Riot shares recently traded for about $7.50, so shares would need to rally by $3.50, or about 47%, for the option to move in-the-money. The strike price is well under Riot’s 52-week high of $15.87.
Over the past year, Riot shares have fallen by 40%, even as revenues are up 81% and earnings growth are up a hefty 246%. Riot makes its money by mining bitcoin, and with prices higher overall in the past year, earnings and revenues should continue to trend higher.
Action to take: Bitcoin and crypto-related companies are highly volatile and depend on prices moving higher.
Speculative investors may like shares here. Bitcoin should trend higher given its scarcity and strong investor demand, which should help most Riot shares higher in the month ahead.
For traders, the December $11 calls could see high double-digit returns or better, depending on bitcoin’s performance between now and the end of the year.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.
