Telehealth platform Hims & Hers Health (HIMS) just reported a massive earnings beat, with shares up 20% on the news. One trader thinks that the stock has run too far, too fast.
That’s based on the June $45 puts. With 43 days until expiration, 7,000 contracts traded compared to a prior open interest of 121, for a 58-fold rise in volume on the trade. The buyer of the puts paid $5.15 to make the bearish bet.
HIMS shares soared to about $50 on the earnings beat, so shares would need to pull back 10%, or $5, to move in-the-money.
The stock has been volatile over the past year, peaking at nearly $73 back in February, before slipping under $30 before its current rally. A post-earnings pullback could be likely over the coming weeks.
HIMS continues to post growth in a challenging environment. Revenues have more than doubled, up 111%, and earnings growth is up a massive 345%. With a strong earnings report, shares should be on track to trend higher.
Action to take: Momentum investors may like shares here. In the short-term, shares could see some pullbacks on various negative headlines, which helped knock shares down at the start of the year. That could present another long-term buying opportunity.
For traders, the June $45 puts are well-positioned for any short-term pullback in shares. Traders should look to take quick mid-double-digit profits.
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.