Fitness technology company Peloton Interactive (PTON) is up over 60% in the past year, more than double the return of the S&P 500. One trader sees shares making further gains in the weeks ahead.
That’s based on the February $10 calls. With 52 days until expiration, 5,021 contracts traded compared to a prior open interest of 106, for a massive 47-fold rise in volume on the trade. The buyer of the calls paid $1.30 to make the bullish bet.
Peloton shares recently traded for about $9.50, so shares would need to rise by $0.50, or 5.2%, for the option to move in-the-money. Peloton has a 52-week high of $10.90, and has recently pulled back. Shares are more than triple off their 52-week low of $2.70.
Peloton is in the midst of a restructuring, and has shown some promise so far, with the market rewarding investors. However, Peloton is still far from profitable, and failing to improve could send shares down in the quarters ahead.
Action to take: Momentum investors may like shares here. The recent pullback and consolidation from 52-week highs looks attractive as a momentum play.
For traders, a call option is the best way to profit from a jump higher in the coming weeks. The February $10 calls are well positioned, and could see mid-to-high double-digit returns on a further rally 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 company mentioned in this article.
