ARKK Finds Support At $90 On Strong Options Volume

ARKK Innovation ETF ARKK is finding support at the $90 strike to end the week, up over 5% for the day on very strong options flows. Looking at the image below, the stock has traded over 197,000 options with over 74,000 calls and 123,000 puts.

Why It Matters: On first glance, the fact that almost three out of every five options being puts today would normally be a bearish sign for the stock.

Prior to the Dec. 17 trading day, ARKK had approximately 953,000 puts and 636,000 calls, of which 40% were set to expire this week.

What option traders are seeing today is the larger put interest expiring, thus forcing dealers to unwind their short hedges and therefore release a fair amount of bearish pressure that has been plaguing the stock as of late.

What's Next: In a surprise twist, the next date with the largest volume and open interest is the Dec. 31 expiry, of which the majority of the volume is concentrated on the put side (image below).

Put volumes for this expiry account for approximately 25% of today's flows. If the majority of these puts are long puts, the stock should find difficulty in clearing the $100 strike.

If the majority of these puts are cash secured puts (short puts), then it could provide additional fuel for the stock to rally or stay supported into the Dec. 31 expiry, which would put the $100 and $105 strikes into focus to end the year.