Unusual Options Activity: Roblox (RBLX)

Shares of metaverse platform Roblox (RBLX) have been at ground zero for the market selloff. One trader sees the potential for shares to decline even further.

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  • That’s based on the January 2024 $17.50 puts. With 616 days until expiration, 16,649 contracts traded against an open interest of 398, for a 49-fold jump in volume on the trade. The buyer of the puts paid $6.13 to get into the trade.

    The stock recently traded for about $24, so it would need to fall another 25 percent for the option to move in-the-money. Shares have traded as high as $141 in the past year, so the stock is already 83 percent off its peak.

    As an early-stage company, the firm is far from profitable. But the big selloff has moved shares from 172 times forward earnings to about 70 times forward earnings over the next year. Plus, revenues are growing quickly, up 84 percent over the past year.

    Action to take: Shares likely have some more downside given current market conditions. But given that they’re more than 80 percent off their highs, share should rebound and move higher in time. Particularly if the company continues to be a leader in the metaverse space.

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  • For traders, the put options are likely a solid short-term trade. Look for double-digit returns or higher in the coming weeks. With so much time to play out, it’s likely not worth holding until expiration.


    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.