Unusual Options Activity: Affirm Holdings (AFRM)

Shares of mobile commerce company Affirm Holdings (AFRM) have been declining in recent weeks after a big jump higher earlier in the year. One trader sees the potential for shares to reverse course and trend higher again.

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  • That’s based on the May $125 calls. With 141 days until expiration, over 5,125 contracts traded compared to an open interest of 336, for a 15-fold rise in volume. The buyer of the calls paid $15.40 to make the trade.

    Shares last traded around $107, so they would need to rise $18, or about 17 percent between now and May for the trade to move in-the-money.

    Even with the recent pullback, the payments company is still up for the year, although only by about 5 percent. That’s lagging the S&P 500 by about 20 points.

    Action to take: The company is still in its early growth stage, and is setting itself up for future success with partnerships in the mobile payment space today. Revenue is up 55 percent over the past year, and the next few years could be massive for the company. Investors may like shares today, although it will be years before the stock pays dividends.

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  • For traders, shares do look oversold in the short term, which makes the May calls look like a reasonable rebound trade. With a 52-week high of $176, the $125 calls look reasonably priced for a rebound.


    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 of the companies mentioned in this article.

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