Unusual Options Activity: Riot Platforms (RIOT)

Shares of cryptocurrency mining company Riot Platforms (RIOT) have been cut in half over the past year, even with shares more than double off their recent low. One trader sees the current rally continuing.

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  • That’s based on the September $8 calls. With 221 days until expiration, 7,034 contracts traded compared to a prior open interest of 195, for a 36-fold rise in volume on the trade. The buyer of the calls paid $1.96 to make the bullish bet.

    Shares recently went for about $7.50, making this an at-the-money trade. Shares have a 52-week low of $3.25, set just at the end of last year. The strong rally has been better for Riot shares than the move higher in big cryptocurrencies like bitcoin, which the company mines.

    Riot has struggled operationally in the past year thanks to the big drop in cryptocurrency prices. Revenues were down nearly 30 percent compared to the prior year. The one bright spot is that the company has a strong balance sheet, with over $200 million in net cash.

    Action to take: It’s possible that there’s a short-term pullback in cryptocurrencies and related stocks in the coming weeks, following the strong rally. That could create a buying opportunity for investors, rather than chasing the stock higher now.

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  • For traders, the calls are an attractive bet, but they may get cheaper in the coming days following the big rally of the past few weeks. Rather than pay close to $2.00, traders may want to wait to get in at a more reasonable price for the calls, say $1.50 or less.


    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.