Unusual Options Activity: PagSeguro Digital (PAGS)

Brazilian fintech company PagSeguro (PAGS) has a healthy long-term chart, moving higher with some sharp, but quickly recovered, drops along the way. Following the recent market weakness, one trader is betting on a move higher with the January 2022 $65 calls.

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  • That’s about $10 per share higher from the current price near $65. Over 10,100 contracts traded, a 34-fold rise in volume from the prior open interest of 299. The buyer paid about $9.10 on average.

    Shares have had a sizeable correction over the past few days as tech, particularly software companies, have gotten hammered. With 322 days until expiration, however, this trade has plenty of time to play out and move substantially in-the-money.

    Action to take: This is an attractive trade on a rapidly-rising stock, with a reasonable strike price that could generate huge returns for traders. Thanks to the market selloff Wednesday, the bid/ask spread on the option looks well below what the option buyer paid, meaning traders can get on the tailcoat of a longer-term trade at a more reasonable price.

    Traders may want to buy multiple contracts and take some capital off the table along the way, or use any market volatility in the next few days to build into a position at a potentially cheaper price.

  • Special: Hidden Stock Under $5 Holds Tech World Hostage