Bitcoin miner Core Scientific (CORZ) is up 194% over the past year. Shares have even held up as bitcoin prices have pulled back in recent months. One trader sees a potential decline over the coming weeks.
That’s based on the August 16 $8 puts. With 38 days until expiration, 9,141 contracts traded compared to a prior open interest of 225, for a 41-fold rise in volume on the trade. The buyer of the puts paid $0.40 to make the bearish bet.
Core Scientific shares recently traded just over $10, meaning the stock would need to decline by at least $2, or 20%, for the option to move in-the-money. Core remains close to its 52-week high of $10.70, set in mid-June.
Thanks to rising bitcoin prices over the past year, revenues are up nearly 49%. And shares are on track to trade at 20 times forward earnings, down from 77 times right now.
Action to take: With bitcoin prices pulling back, Core is likely to see a pullback as well. Investors interested in the crypto space should look for a sign of prices trending higher before getting into trades like Core.
For traders, the August $8 puts don’t have much time to play out. But they could see mid-to-high double-digit returns in the coming weeks, if there’s a further pullback in crypto prices.
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.