Tesla Soars, Options Traders Place Bets Through ARKK

Cathie Wood-led ARK Innovation ETF ARKK began to rebound May 13 after hitting a low of $97.22. The ETF had been trading in a sharp downtrend since reaching an all-time high of $159.70 Feb. 16.

Back in February, when ARKK and a few of the firm's other investment arms such as ARK Fintech Innovation ETF ARKF were reaching new highs, retail investors were watching every trade completed within the ETFs as a basis for their own trading ideas of individual securities. When the ARK portfolios began to trend downwards, Cathie Wood’s popularity began to wane and ARK trade updates were largely ignored.

This might be about to change, however, with ARKK now up almost 30% since mid-May and focus returning to many of Wood’s favorites as earnings season kicks into gear. A number of individual securities within the ARKK fund have also made bullish moves recently and on Monday; Tesla Inc TSLA was trading up over 4%.

The top five holdings in the ARKK fund:

Tesla with a 9.93% weighting.

Roku Inc ROKU with 5.88% weighting.

Teledoc Health Inc TDOC with a 5.72% weighting.

Shopify Inc SHOP with a 4.55% weighting.

Zoom Video Communications Inc ZM with a 4.52% weighting.

On Monday, options traders decided to play the run up to tech earnings through the ARK Innovation ETF. The majority of the calls placed had a strike price of $126 and an expiry of July 16.

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 the stock price. A sweeper pays the market price for the call or put 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 ARKK Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

At 9:41 a.m., a trader executed a call sweep near the ask of 207 ARK Innovation ETF options with a strike price of $128 expiring on July 16. The trade represented a $26,910 bullish bet for which the trader paid $1.30 per option contract.
At 12:20 p.m., a trader executed a call sweep near the ask of 1230 ARK Innovation ETF options with a strike price of $126 expiring on July 16. The trade represented a $188,190 bullish bet for which the trader paid $1.53 per option contract.
At 12:20 p.m., a trader executed a call sweep near the ask of 2314 ARK Innovation ETF options with a strike price of $126 expiring on July 16. The trade represented a $356,356 bullish bet for which the trader paid $1.54 per option contract.
At 12:20 p.m., a trader executed a call sweep near the ask of 1168 ARK Innovation ETF options with a strike price of $126 expiring on July 16. The trade represented a $181,040 bullish bet for which the trader paid $1.55 per option contract.
At 12:20 p.m., a trader executed a call sweep near the ask of 371 ARK Innovation ETF options with a strike price of $126 expiring on July 16. The trade represented a $57,505 bullish bet for which the trader paid $1.55 per option contract.
At 12:20 p.m., a trader executed a call sweep near the midpoint of 200 ARK Innovation ETF options with a strike price of $126 expiring on July 16. The trade represented a $31,400 bullish bet for which the trader paid $1.57 per option contract.
At 12:24 p.m., a trader executed a call sweep near the ask of 1055 ARK Innovation ETF options with a strike price of $126 expiring on July 23. The trade represented a $298,565 bullish bet for which the trader paid $2.83 per option contract.