Unusual Options Activity: Coinbase (COIN)

Shares of cryptocurrency brokerage firm Coinbase (COIN) have surged over 60 percent in recent weeks amid talk of a bitcoin ETF being approved by the SEC. One trader sees a pullback in the weeks ahead.

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  • That’s based on the August $85 puts. With 35 days until expiration, 14,081 contracts traded compared to a prior open interest of 257, for a 55-fold rise in volume on the trade. The buyer of the puts paid $9.15 to make the bearish bet.

    Shares recently traded near the $85 range, after closing in $90 on Tuesday, making this an at-the-money trade. That’s still well over the stock’s 52-week low of $31.55 per share.

    Coinbase has struggled over the past year, as crypto trading volume has dropped amid a crypto winter. However, the broker has survived as other firms have imploded. And Coinbase would be a strong contender for custody services for an eventual bitcoin ETF.

    Action to take: Shares have rallied too far, too fast in recent sessions and are likely to pull back. Interested investors can likely get shares in the $70-80 range as the stock comes off its overbought level.

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  • For traders, shares have reached overbought territory. Barring immediate and positive news about a bitcoin ETF, shares are likely to pull back in the weeks ahead. That could lead to 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 of the companies mentioned in this article.