Silvergate Capital Stock's February Expiration Has Options Trader Seeing This Much Downside

Shares of Silvergate Capital Corp SI dropped sharply on Thursday after the company announced select preliminary fourth-quarter financial metrics and provided a business update, which includes reducing headcount by 40%.

On CNBC’s "Options Action," Mike Khouw of Optimize Advisors said Silvergate traded at six-times average daily options volume on Thursday.

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There were buyers of 13,832 of the Feb. 10-puts at an average price of $1.50 per contract, Khouw mentioned.

The traders saw the downside of 35% in Silvergate’s stock by February expiration.

Price Action: Shares of Silvergate Capital dipped 42.7% to close at $12.57 on Thursday, and lost another 5.1% in the after-hours trading session. Friday morning shares are down 9.32% at $11.38.

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