Coinbase (COIN) is trading lower today, rewarding downside put positions opened only yesterday.
On Dec. 6, Market Rebellion’s Unusual Option Activity Service found that 3,000 Weekly $41 puts, expiring this Friday, were bought for $0.30 with shares at $48.24. Volume was well above the strike’s previous open interest of 247 contracts, showing that this was fresh interest.
Those puts traded up to $1.61 this session, over 5 times their purchase price. The stock declined 15.22% in the same time period, a large move but nowhere near that of its options on a relative basis.
Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.
COIN was down by 2.71% at $41.26 at the end of today’s trade.
Ready to start trading? Try Unusual Option Activity Essential. Learn how you can follow the “smart money” with a fresh UOA trade idea each week – including technical levels so that you know how to manage each trade!