Unusual Options Activity: Sea Limited (SE)

Asia-based ecommerce platform Sea Limited (SE) has dropped 30 percent in the last year. One trader is betting on shares to start the year trending higher.

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  • That’s based on the January 19, 2024 $42.00 calls. With 25 days until expiration, 6,065 contracts traded compared to a prior open interest of 196, for a 31-fold rise in volume on the trade. The buyer of the calls paid $1.20 to make the bullish bet.

    Sea Limited recently traded for about $38, so they would need to rise $4, or just under 10 percent, for the option to move in-the-money.

    Operationally, it’s been a quiet year. Revenues are up 5 percent, but shares have been barely profitable and currently trade near 30 times earnings.

    The technical picture is more interesting. The digital platform is trading near a 52-week low, and which has been a lower range for shares since August.

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  • It’s possible that shares pop higher in the coming weeks, retesting a prior breakout in October that failed.

    Action to take: Shares of Sea Limited look like a contrarian buying opportunity with shares near their recent lows. Investors may want to close out the trade if shares break lower, but there’s a strong chance shares try to break higher, for quick low-double-digit gains.

    For traders, the January $42 calls are well positioned for a quick pop higher in shares. If such a move occurs quickly, traders should look to close out the trade quickly.


    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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