Fitness technology company Peloton Interactive (PTON) saw shares jump 35% on earnings last week. One trader is betting shares will be able to trend higher into early 2025.
That’s based on the January 2025 $9.00 calls. With 144 days until expiration, 12,446 contracts traded compared to a prior open interest of 109, for a massive 114-fold increase in the trade. The buyer of the calls paid $0.34 to make the bullish bet.
Peloton shares last traded near $4.50, meaning shares would need to roughly double for the option to move in-the-money. Shares are already 68% off their 52-week low of $2.70.
While Peloton is still on track to lose money overall this year, the recent earnings indicated that margins are improving, and fourth-quarter revenue will be higher than expected. That could help shift the company towards turning a profit next year.
Action to take: Shares are a still speculative at this stage, but the company’s turnaround is now starting to look promising. Momentum investors will likely push shares higher over the next few months.
For traders, the January 2025 $9 calls are aggressive, but also inexpensive enough to see big returns from a further rally in shares into next year. Traders may want to consider scaling into the position, buying on down days, and taking some profits when shares have a big move higher.
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.