Consumer tech company Pelton Interactive (PTON) is down 46% over the past year. Shares dropped 15% alone on Tuesday, as the company looked to issue a $1 billion loan. One trader sees shares bouncing higher.
That’s based on the June 28 $4 calls. With 36 days until expiration, 5,027 contracts traded compared to a prior open interest of 205, for a 25-fold rise in volume on the trade. The buyer of the calls paid $0.24 to make the bullish bet.
Shares recently traded for about $3.30, so they would need to rise $0.70, or about 21%, for the option to move in-the-money.
The strike price is almost mid-way between the 52-week low of $2.70 and the 52-week high of $9.87.
Operationally, Peloton has faced some heavy losses, including a $762 million loss over the past year.
The company has been working to restructure and improve its revenues, but continues to struggle. Taking on new debt now could mean more selling pressure for shares.
Action to take: Shares are moving lower again on the loan issue, and may move to re-test their prior lows before moving higher. If Peloton has any positive developments, shares could see a jump higher.
For traders, the June $4 calls could be a winner, but it may take a day or two for shares to reach a low before moving to bounce higher.
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 company mentioned in this article.