Fastly Options Traders Are Expecting Another Earnings Sell-Off

Fastly Inc FSLY is expected to report first-quarter 2021 earnings after the closing bell on Wednesday and some options traders are expecting a bearish reaction.  

When the cloud computing services company reported fourth-quarter earnings Feb. 17, its revenues had grown 45% year-over-year to $291 million. The following day, Fastly’s stock lost almost 15% of its value, and Monday’s options activity looks as though traders are betting the company’s first-quarter 2021 earnings will see the stock suffer a similar fate. 

On Monday, options traders bet over $1.38 million shares of Fastly are going lower.  

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

• At 9:40 a.m., a trader executed a put sweep, near the ask, of 1,800 Fastly options with a $60 strike price expiring on May 7. The trade represented a $455,400 bearish bet for which the trader paid $2.53 per option contract. 
• At 11:28 a.m., a trader executed a put sweep, near the ask, of 599 Fastly options with a $60 strike price expiring on May 7. The trade represented a $188,685 bearish bet for which the trader paid $3.15 per option contract. 
• At 11:50 a.m., a trader executed a put sweep, near the ask, of 424 Fastly options with a $60 strike price expiring on May 21. The trade represented a $197,160 bearish bet for which the trader paid $4.65 per option contract. 
• At 11:50 a.m., a trader executed a put sweep, near the ask, of 448 Fastly options with a $60 strike price expiring on May 21. The trade represented a $210,112 bearish bet for which the trader paid $4.69 per option contract. 
• At 11:52 a.m., a trader executed a put sweep, near the ask, of 693 Fastly options with a $60 strike price expiring on May 21. The trade represented a $336,105 bearish bet for which the trader paid $4.85 per option contract. 

See Also: An Earnings Beat For SunPower Or Sunrun Could Scorch Shorts

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. 

FSLY Price Action: Shares of Fastly were down 3.37% at $61.72 at market close Monday.

(Photo by Thomas Lefebvre on Unsplash)