Asset manager Blue Owl Capital (OWL) is down 7% over the past year, with share sinking with the overall market. One trader is betting on a further move lower in the coming weeks.
That’s based on the May 2025 $16 puts. 15,051 contracts recently traded hands, a massive 87-fold rise over the prior open interest of 172 contracts. The option has 38 days until expiration, and the buyer of the puts paid $1.70 to make the bearish bet.
Blue Owl shares recently traded for about $16 after their recent selloff, making this an at-the-money trade. Shares have now given up their gains over the past year, and sit just above their 52-week low of $15.18.
Operationally, Blue Owl has been performing well. Revenues are up 28% over the past year, and earnings are up 15%. Declining interest rates may interfere with the spread that Blue Owl earns in its alternative investments.
Action to take: Blue Owl is interest-rate sensitive, and has been selling off amid a flight to safety. Investors should wait for the fear to subside before buying. Blue Owl currently pays investors a 4.0% dividend yield.
For traders, with shares trending down and uncertainty rising in the credit markets, the May $16 puts are well positioned for mid-double-digit returns in the weeks 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 company mentioned in this article.
