Unusual Options Activity: Applied Digital Corporation (APLD)

Data center operator Applied Digital Corporation (APLD) has moved up nearly five-fold from its 52-week lows. One trader is betting shares will continue to rise through the end of the year.

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  • That’s based on the January 2024 $11 calls. With 172 days until expiration, 6,902 contracts traded compared to a prior open interest of 127, for a 54-fold rise in volume on the trade. The buyer of the calls paid $2.80.

    Shares recently traded for just under $10, so the stock would need to rise another 10 percent for the option to move in-the-money. The strike price is also just under the stock’s 52-week high of $11.62.

    Applied Digital is in its early stages after pivoting away from investing in blockchain technologies. The company is still a ways off from earning consistent revenues, but the move higher in shares shows the market likes what it’s seeing with the turnaround so far.

    Action to take: Investors may like shares for the long haul here. Data centers are a profitable business once they’re up and running, and many of the big names come with a valuation premium. It’s also possible in time that Applied Digital could pay a dividend, but that is likely years off.

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  • For traders, the January calls are a reasonable bet. Even if the stock’s uptrend slows from here, the trend is clear and shares are reasonably priced to trend higher in the months ahead.


    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.