Bitcoin mining operator CleanSpark (CLSK) is up 11% over the past year, far underperforming the return of bitcoin itself, which more than doubled. One trader sees CLSK staging a rally in the coming weeks.
That’s based on the January 31 $17.50 calls. With 23 days until expiration, 5,359 contracts traded compared to a prior open interest of 110, for a 49-fold rise in volume on the trade. The buyer of the calls paid $0.17 to make the bullish bet.
CleanSpark shares recently traded near $11.50, so the stock would need to rally by $6, or over 52%, for the option to move in-the-money. The move would also be well under the stock’s 52-week high of $24.72.
While bitcoin prices have been soaring, bitcoin miners have to continue to invest in the latest mining gear and source inexpensive sources of electricity. Those costs mean that even with soaring prices, CleanSpark is operating at a loss.
Action to take: Investors interested in bitcoin could see better returns this year with one of the bitcoin ETFs, as they don’t carry the business risks of bitcoin mining and just own bitcoin itself.
For traders, the January 31 $17.50 calls could see big returns given their low cost. But bitcoin would need to stage a massive rally in the coming weeks. Aggressive traders may be able to see high double-digit returns, but should look to take quick profits.
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.