Coinbase Options Traders See The Stock Plunging Further

Coinbase Global Inc COIN, a cryptocurrency exchange platform, went public April 14 and has trended downhill since.

Currently trading down 30% from its listing price of $328, the stock is heavily affected by Bitcoin’s (CRYPTO: $BTC) wild price fluctuations such as the news Wednesday when the Chinese government’s stance on the cryptocurrency caused Bitcoin to crash 27%.

Bitcoin rebounded late Wednesday and Thursday only to get smacked down again Friday morning when it was reported the Chinese government intensified its anti-Bitcoin rhetoric and reiterated its plan to clamp down on the cryptocurrency’s mining and trading.

A number of options traders believe China’s tough stance will tank Coinbase’s stock further and bet over $1.32 million its stock will see much lower prices by the beginning of 2022.

The Coinbase Option Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

• At 10:53 a.m., Friday a trader executed a put sweep, above the ask, of 1,752 Coinbase options with a strike price of $115 expiring on Jan. 21. The trade represented a $979,368 bearish bet for which the trader paid $5.59 per option contract.
• At 10:53 a.m., a trader executed a put sweep, near the ask, of 244 Coinbase options with a strike price of $115 expiring on Jan. 21. The trade represented a $139,080 bearish bet for which the trader paid $5.70 per option contract.
• At 11:07 a.m., a trader executed a put sweep, near the ask, of 252 Coinbase options with a strike price of $130 expiring on Jan. 21. The trade represented a $209,160 bearish bet for which the trader paid $8.30 per option contract.

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 the 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.

COIN Price Action: Shares of Coinbase were trading down 3.48% to $225.27 as of Friday afternoon at publication.