Satellite communications company AST SpaceMobile (ASTS) shares are up over 800% in the past year and are still in a strong uptrend. One trader sees shares pulling back in the coming months.
That’s based on the April $30 puts. With 64 days until expiration, 9,034 contracts traded compared to a prior open interest of 102, for an 89-fold rise in volume on the trade. The buyer of the puts paid $5.35 to make the bearish bet.
ASTS shares recently popped higher to just over $31, meaning shares would need to decline about 3% for the option to move in-the-money. While the stock has popped higher, it’s still well off its 52-week high of $39.08 from over the summer.
Operationally, ASTS is an early-stage company facing significant losses of about $150 million last year. Revenues are also non-existent as ASTS looks to build out its space-based broadband network, although the company is making significant progress towards that goal.
Action to take: Speculative investors may like ASTS shares on any pullback in the months ahead. Investors are willing to send the market cap higher ahead of profitability, and ASTS operates as a similar player to privately-held Starlink.
For traders, the April $30 puts play well to shares getting overextended in the short-term. While ASTS is in a strong uptrend, the jump higher leaves shares looking overstretched and ready to pull back and consolidate.
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.