Shares of Riot Blockchain Inc (NASDAQ:RIOT) are trading up 10.87% at $14.34 — near the top of the Nasdaq — after the company issued a letter of intent to purchase digital currency specialist Logical Brokerage. RIOT stock is pacing for its second straight double-digit percentage gain, and bullish options traders are striking while the iron’s hot.
At last check, 13,728 RIOT calls were on the tape, two times what’s typically seen at this point in the trading session. While call writers seem to be targeting the February 18 strike — the most active option — shorter-term traders appear to be purchasing new positions at the weekly 2/9 17-strike call. If this is the case, the goal is for Riot Blockchain to break out above $17 by week’s end.
Though RIOT shares were trading north of $17 as recently as late January, they have struggled since topping out at a six-year high of $46.20 in late December. And despite the stock’s recent surge, it is running out of steam near its 80-day moving average, currently located at $16.25.
This broader technical backdrop may explain why RIOT options traders have preferred long puts over calls in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock’s 10-day put/call volume ratio sits at a top-heavy 1.74.
In the front-month series, specifically, peak put open interest is found at the February 15 strike, and data from the major options exchanges confirms buy-to-open activity — meaning bears are betting on bigger short-term losses. Regardless of where RIOT stock settles at next Friday’s close, when the contracts expire, the most the options buyers stand to lose is the initial premium paid.