Shares of cryptocurrency brokerage firm Coinbase (COIN) rallied after reporting dismal earnings, as the overall market surged higher on a lower-than-expected CPI report. One trader is betting the shares will decline from here.
That’s based on the November $90 put options. With 98 days until expiration, 2,817 contracts traded compared to a prior open interest of 134, for a 21-fold rise in volume on the trade. The buyer of the puts paid $18.48 to make the trade.
Shares recently traded for about $85, so the option is already in-the-money. That would still be well over the stock’s 52-week low of $41 per share.
The company is down nearly 70 percent in the past year. The company’s growth has collapsed as investor demand for cryptocurrencies has dried up during this latest crypto winter.
Action to take: Shares may be worth buying after another dip lower. Coinbase is a leading brokerage for institutional investors, and the company has sufficient cash to weather this latest downturn. But investors will likely have a chance to buy a bit lower, say under $75.
For traders, the put options are attractive here. The stock was trending down before the CPI data came out, which caused a brief boost in the share price before finally trading down on Thursday. Traders can likely nab a high-double-digit gain in the weeks ahead on a drop in the stock.
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.