Crowdstrike Stock Drops 10%: Are Option Traders Selling?

What Happened: Crowdstrike CRWD is down over 10% on the day with over 11 million shares traded versus the 10-day average of 3 million shares. Morgan Stanley had earlier this Monday initiated coverage on the stock with a price target of $247, which could have been a catalyst for the aggressive drop on the day.

SEE ALSO: Crowdstrike shares are trading lower after Morgan Stanley Initiates Coverage

Prior to today, option traders had approximately 126,000 calls and 188,000 puts for a total of 314,000 options. However, this Monday option traders have been aggressive, trading over 112,000 options (image below).

Why It Matters: Of the approximately 112,000 options traded today, about six out of 10 of them have been calls. However, very few of those options (about 22,000) are short dated (expiring Friday).

This suggests option traders aren't really day trading this stock and are looking ahead to further expiries, hence holding a medium- or longer-term view of the stock.

What's Next: Looking past the current weekly expiry, the largest by volume is the Dec. 17 expiry, with approximately 17,000 options traded and over 11,000 of them being calls (image below).

Using this option chain, while there is solid volume between the $250 and $310 strikes, the largest strikes by open interest are between $280 and $300. This may suggest option traders are still bullish (looking a month out) and are expecting a price range above the current $252 spot price (as of this writing).

It should be noted Crowdstrike has an upcoming earnings print on Dec. 1, which could drastically change traders' expectations upon release.