Options Traders May Be Fearing More Downside For Cathie Wood's ARKK

Ark Innovation ETF ARKK is down over 30% since it reached an all-time-high of $159.70 on Feb. 16, but options traders may be seeing more downside for Cathie Wood’s fund, which holds shares of companies that Wood feels are disruptive innovators.

The ARKK Trades: At 2:09 p.m. Thursday a trader executed a put sweep of 7,238 ARKK options with a $100 strike price expiring April 16. The trade represented a $38,000 bearish bet for which the trader paid $5.25 per option contract.

At 1:04 p.m., a trader executed a put sweep of 400 ARKK options with a $110 strike price expiring on Jan. 20, 2023. The trade represented a $1.4-million bearish bet for which the trader paid $26 per option contract.

At 11:16 p.m., a trader executed a put sweep of 1,500 ARKK options with a $125 strike price expiring May 21. The trade represented a $2.49-million bearish bet for which the trader paid $16.60 per option contract.

At 11:15 p.m., a trader executed a put sweep of 819 ARKK options with a $100 strike price expiring on May. 21. The trade represented a $1.35-million bearish bet for which the trader paid $16.50 per option contract.

At 11:15 p.m., a trader executed a put sweep of 1,028 ARKK options with a $125 strike price expiring on May. 21. The trade represented a $1.7-million bearish bet for which the trader paid $16.50 per option contract.

At 11:15 p.m., a trader executed a put sweep of 1,087 ARKK options with a $125 strike price expiring on May 21. The trade represented a $1.78-million bearish bet for which the trader paid $16.40 per option contract.

Together, traders are betting almost $8.76 million that the share price of ARKK is going lower.

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating a large move in stock price will occur imminently.

A sweeper pays market price for the call options, 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.

About ARKK: Cathie Wood’s Ark ETFs have been wildly popular this year, and retail investors watch the fund’s activity daily to see which companies are being bought and sold.

ARKK holds numerous stocks in this fund popular with retail traders such as Telsa Inc TSLA, Palantir Technologies PLTR and DraftKings DKNG.

Although ARKK holds some pharmaceuticals and biosciences companies, most of its holdings are in the tech sector, which is in a rout.

Watch Benzinga's recent interview with Cathie Wood here: