Unusual Options Activity: StoneCo (STNE)

E-commerce financial technology company StoneCo (STNE) has been trading lower in recent months. One trader sees shares declining further into the new year.

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  • That’s based on the January 2024 $8 puts. With 85 days until expiration, 49,324 contracts traded compared to a prior open interest of 293, for a staggering 168-fold jump in volume on the trade. The buyer of the puts paid $0.30 to make the bearish bet.

    Shares recently traded for about $10, so they would need to drop about 20 percent, or $2, for the option to move in-the-money. The $8 strike price is also right at the 52-week low of $8.09.

    Despite the trend lower in shares, StoneCo has been performing well operationally. Revenues are up nearly 30 percent over the past year, and the stock trades at 10 times forward earnings.

    Action to take: Interested investors should wait for the current downtrend to play out. A re-test of the 52-week low near $8 would lead to a better valuation, especially as the company’s fundamentals look strong.

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  • For traders, the January 8 puts play to the current downtrend in shares.

    They have plenty of time to play out, and the price is low enough for high double-digit gains or better in the months ahead. Traders could also look to play call options should shares get back near $8.


    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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