Unusual Options Activity: Marathon Digital Holdings (MARA)

Digital asset company Marathon Digital Holdings (MARA) has risen nearly 70 percent in recent weeks on news that the SEC may approve a bitcoin ETF. One trader is betting shares will give back some of their recent gains in the coming weeks.

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  • That’s based on the August $18 puts. With 36 days until expiration, 8,144 contracts traded compared to a prior open interest of 148, for a 55-fold rise in volume on the trade. The buyer of the puts paid $3.10 to make the bearish bet.

    Marathon shares recently went for about $17, so the options are about $1.00 in-the-money already. Shares recently hit their 52-week high of $18.88.

    The digital asset company is up nearly five-fold this year, having started the year around $3.40. While the company hasn’t been profitable, the rising prices of digital assets have moved operations in the right direction, and revenues are now down just 1 percent on a year-over-year basis.

    Action to take: Shares may have risen too far, too fast, and look due for a pullback. Interested investors can likely get the stock under $12.

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  • If the SEC approves a bitcoin ETF, however, shares may not trend that low and could continue higher.

    For traders, shares are due for a rest after their big rally. The August puts make sense as a way to profit from that trend.

    Provided shares do take a breather, the put options can likely deliver mid-double-digit profits in the coming weeks.


    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.

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