Shares of cryptocurrency brokerage Coinbase (COIN) have been trading much like the overall crypto space ever since shares started trading last year. One trader sees the potential for a jump higher in the coming weeks.
That’s based on the March 4 $205 calls. With 11 days until expiration, 2,514 contracts traded against a prior open interest of 109, for a 23-fold rise in volume. The buyer of the calls paid $9.20 to make the trade.
Shares are in the low $190 range, so they would need to rise about 8 percent for the option to move in-the-money.
Shares of the crypto broker are down one-third over the past year since its IPO. While the company trades much like the cryptocurrency market, the company is highly profitable, with a 316 percent revenue jump in the past year, and a profit margin of just under 50 percent.
Action to take: The company will continue to benefit from the growth of cryptocurrency investments by retail and institutional traders alike. In time, it will likely break out of a trading pattern based on the broader cryptocurrency market, which makes it look like an interesting buy under $200 per share.
For traders, the March calls don’t have much time to play out, but could deliver mid double-digit returns. Traders might want to also consider longer-dated calls to profit from the low price of shares here.
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.