World Wrestling Entertainment, Inc. (NYSE: WWE) gapped up over 8% Wednesday morning and at least one institution may have seen it coming.
What To Know: On Tuesday an options trader purchased a call contract worth almost $360,000, which was followed by a smaller contract on Wednesday morning worth $43,630. It’s unusual for a trader to spend so much on a single contract in World Wrestling Entertainment’s stock, so Tuesday’s order is especially notable.
On Wednesday morning, there was social media chatter that Reddit’s WallStreetBetscommunity had taken an interest in World Wrestling Entertainment. It’s not surprising that World Wrestling Entertainment’s stock caught the community’s eye as the stock has all the typical characteristics of a Reddit favorite:
- Bizarre levels of ownership: Institutions own 120.09% of World Wrestling Entertainments 44.73 million share float.
- High short interest: As of May 14, 22.84% of the stock’s float is held short.
Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.
These types of call option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.
The World Wrestling Entertainment Option Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:
- At 12:52 p.m., Tuesday a trader executed a call sweep, near the ask, of 227 World Wrestling Entertainment options with a strike price of $50 expiring on Jan. 21, 2023. The trade represented a $359,341 bullish bet for which the trader paid $15.83 per option contract.
- At 9:31 a.m., Wednesday a trader executed a call sweep, near the ask, of 624 World Wrestling Entertainment options with a strike price of $85 expiring on July. 16. The trade represented a $43,680 bullish bet for which the trader paid 70 cents per option contract.
WWE Price Action: Shares of World Wrestling Entertainment were trading up 10.6% to $64.32 at publication time.
Photo credit: Ed Webster, Flickr
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