Unusual Options Activity: LiveRamp Holdings (RAMP)

Shares of IT connectivity platform LiveRamp Holdings (RAMP) has seen shares taken a major dive over the past few months, although the company jumped 22 percent higher on Friday thanks to stronger-than-expected earnings. One trader sees a lot of volatility ahead, with the chance for shares to resume their longer-term downtrend.

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  • That’s based on the December $45 puts. With 129 days until expiration, over 3,740 contracts traded against a prior open interest of 102, for a 37-fold rise in volume.

    The buyer of the contracts paid about $4.55 to make the trade. With shares around $47.50, a mere drop of $2.50 per share would move the contract in-the-money.

    Following its steep drop from a high of $87, shares are now down 14 percent over the past year, far underperforming the overall tech space. Like many tech companies, the firm isn’t profitable right now.

    Action to take: In the short-term, shares are likely to at least retest their recent lows, which bodes well for that option trade. The December puts have just over 4 months to play out, but if the low is retested and shares move higher, investors may then want to buy shares or flip to a call option trade to play that move higher. If shares test the lows and keep going lower, the option trade could perform well.

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  • So this stock offers a potential for a big swing trade, or at the very least a hedge against the overall market.

     

    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.