Today, trading volumes for Coinbase (NASDAQ:COIN) call options, set to expire on Thursday, exceeded three times the usual rate. This surge suggests investors anticipate COIN to rise above $81.78 per share from its current $78.20, despite a 21.6% decrease from $99.77 since July.
This optimism seems to be fueled by Bitcoin's recent performance, which saw a 23% increase from $25,162 on September 11 to nearly $31,000 today. This surge in Bitcoin's value may have boosted Coinbase's crypto trading activities in late Q3 and October, potentially pushing revenues over the projected figure of $655 million.
In addition to betting on a rise in COIN's value, investors are also capitalizing on high premiums by shorting out-of-the-money put options with near-term expiration periods. An example is the $73.00 strike price options for November 10, which were sold for $4.05 each. This strategy offers significant put yield and downside protection down to $68.95 per share.
An alternative investment strategy being utilized involves securing sufficient cash or margin for each put contract to be shorted and selling these contracts at the strike price. If these contracts expire worthless and this strategy is repeated every three weeks throughout a year, it could yield an annualized expected return of 94.3%. This presents a significant potential upside for COIN investors.
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