Riot Blockchain Experienced Unusual Option Activity That Dropped Their Share Price

    17 May 2021

    Riot Blockchain has shared information that their shares have undergone unusual option activity and their price has dropped to $ 22.16. It happened after the option warning

    Sentiment: BULLISH

    Option Type: TRADE

    Trade Type: PUT

    Expiration Date: 2021-05-21

    Strike Price: $22.00

    Volume: 4327

    Open Interest: 2023

    Three Indications Of Unusual Options Activity

    One way options market activity can be considered unusual is when volume is exceptionally higher than its historical average. The volume of options activity refers to the number of contracts traded over a given time period. Open interest is the number of unsettled contracts that have been traded but not yet closed by either counterparty. In other words, open interest represents the quantity of contracts that individual parties have written but not yet found a counterparty for (i.e. a buyer finding a seller, or a seller finding a buyer). Another indicator of unusual options activity is the trading of a contract with an expiration date in the distant future. Additional time until a contract expires generally increases the potential for it to grow its time value and reach its strike price. It is important to consider time value because it represents the difference between the strike price and the value of the underlying asset.

    “Out of the money” contracts are unusual because they are purchased with a strike price far from the underlying asset price. “Out of the money” occurs when the underlying price is under the strike price on a call option, or above the strike price on a put option. Buyers and sellers try to take advantage of a large profit margin in these instances because they are expecting the value of the underlying asset to change dramatically in the future.

    Bullish And Bearish Sentiments

    Options are “bullish” when a call is purchased at/near ask price or a put is sold at/near bid price. Options are “bearish” when a call is sold at/near bid price or a put is bought at/near ask price.

    These observations are made without knowing the investor’s true intent by purchasing these options contracts. The activity is suggestive of these strategies, but an observer cannot be sure if a bettor is playing the contract outright or if the options bettor is hedging a large underlying position in common stock. For the latter case, bullish options activity may be less meaningful than the exposure a large investor has on their short position in common stock, writes Benzinga.

    Riot Blockchain is listed on the NASDAQ stock exchange. Earlier the financial holding JPMorgan announced that the Riot Blockchain securities will be included in the basket of shares of public companies, through which its clients can invest in the digital asset market. The basket also includes shares of Square, PayPal, NVIDIA, AMD, TSMC, Intercontinental Exchange, CME Group, Overstock, Silvergate and MicroStrategy.

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