Options Traders Bet Bear, Bull On WISH Stock

ContextLogic Inc WISH continued to be a top trending stock on Reddit's WallStreetBets on Thursday despite trading at all-time lows.

On Thursday, the stock lost support at the $6.71 area despite testing it as support on Wednesday and bouncing. The level initially became support in the premarket on Aug. 13 when ContextLogic tanked following its second-quarter earnings print.

ContextLogic was trading down over 8% lower, which dropped its relative strength index down to 26% on the daily chart. When an RSI measures lower than 30% the stock enters oversold territory which can be a buy signal.

After ContextLogic lost support at the key $6.71 level and didn’t immediately bounce back above it, a number of bearish options traders purchased over $225,248 worth of put contracts of the stock.

In the afternoon, when the stock's RSI dropped heavily below 30% a group of bullish options traders came in and bet $288,796 ContextLogic is in for, at least, a short-term bounce.

See Also: How to Buy ContextLogic Stock Right Now

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 market price for the call or put option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of 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.

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

• At 10:14 a.m., a trader executed a puts sweep near the ask of 500 ContextLogic options with a strike price of $7 expiring on Aug. 20. The trade represented a $25,000 bearish bet for which the trader paid 50 cents per option contract.
• At 10:38 a.m., a trader executed a puts sweep near the ask of 800 ContextLogic options with a strike price of $6 expiring on Sept. 17. The trade represented a $36,000 bearish bet for which the trader paid 45 cents per option contract.
• At 10:41 a.m., a trader executed a puts sweep near the ask of 1,200 ContextLogic options with a strike price of $6 expiring on Sept. 17. The trade represented a $56,400 bearish bet for which the trader paid 47 cents per option contract.
• At 10:46 a.m., a trader executed a puts sweep near the ask of 2,074 ContextLogic options with a strike price of $6 expiring on Sept. 17. The trade represented a $107,848 bearish bet for which the trader paid 52 cents per option contract.

The Bullish WISH Trades: Below is a look at the notable options alerts.

• At 12:07 p.m., a trader executed a call sweep near the ask of 1,000 ContextLogic options with a strike price of $6.50 expiring on Aug. 27. The trade represented a $32,000 bullish bet for which the trader paid 32 cents per option contract.
• At 12:08 p.m., a trader executed a call sweep near the ask of 1,000 ContextLogic options with a strike price of $6.50 expiring on Aug. 27. The trade represented a $32,000 bullish bet for which the trader paid 32 cents per option contract.
• At 12:14 p.m., a trader executed a call sweep near the ask of 1,000 ContextLogic options with a strike price of $6.50 expiring on Aug. 27. The trade represented a $34,000 bullish bet for which the trader paid 34 cents per option contract.
• At 12:27 p.m., a trader executed a call sweep near the ask of 1,000 ContextLogic options with a strike price of $6.50 expiring on Aug. 27. The trade represented a $33,000 bullish bet for which the trader paid 33 cents per option contract.
• At 12:56 p.m., a trader executed a call sweep near the ask of 1,000 ContextLogic options with a strike price of $6.50 expiring on Aug. 27. The trade represented a $34,000 bullish bet for which the trader paid 34 cents per option contract.
• At 1:13 p.m., a trader executed a call sweep near the ask of 1,007 ContextLogic options with a strike price of $6.50 expiring on Aug. 27. The trade represented a $33,231 bullish bet for which the trader paid 33 cents per option contract.
• At 2:01 p.m., a trader executed a call sweep near the ask of 365 ContextLogic options with a strike price of $6 expiring on Sept. 17. The trade represented a $29,565 bullish bet for which the trader paid 81 cents per option contract.
• At 2:03 p.m., a trader executed a call sweep near the ask of 1,000 ContextLogic options with a strike price of $6.50 expiring on Aug. 27. The trade represented a $31,000 bullish bet for which the trader paid 31 cents per option contract.
• At 1:13 p.m., a trader executed a call sweep near the ask of 1,000 ContextLogic options with a strike price of $6.50 expiring on Aug. 27. The trade represented a $30,000 bullish bet for which the trader paid 30 cents per option contract.

WISH Price Action: ContextLogic shares were trading down 8.65% at %6.23 at market close Thursday. 

Image by Gerd Altmann from Pixabay