Large Bullish Option Bet Detected On Roblox For Over $1 Million

Early in today's trading session, a trader placed a large option bet on Roblox Corporation RBLX, trading over 1,200 calls on the $115 strike for the Mar. 18 expiry next year (image below).

What Happened: About 40 after the market open, while the price on the stock was around $105, a trader made a rather large bet on Roblox, trading 1,200 calls for the $115 strike expiring about three months out.

If the trader bought the 1,200 calls for $11.85 in premium per call, they spent approximately $1.4 million betting Roblox will close above the $115 strike by the Mar. 18 expiry.

It should be noted the option market is pricing this option as having approximately a 19% chance to at least break even on the trade.

If the trader sold the $115 calls for the Mar. 18 expiry, they would need at least 120,000 shares, or approximately $3 million in margin, just to own that many shares.

Why It Matters: Any time an option trader makes such a large bet, particularly on a strike that now has a large amount of open interest, this will likely force option dealers and market makers to hedge their short call trade by buying shares.

This could also force other option traders to adjust their contracts higher in ancitipation of a price rise towards the $115 strike.

What's Next: Looking at the option flows today, Roblox has traded over 96,000 options with approximately 68,000 of them calls and 28,000 puts, thus calls outweighing puts by a ratio of 2.1:1 (image below).

It should be noted the stock has approximately 36% of its options rolling off this Friday. This should increase the volatility next week with such a large amount of options rolling off.

If the stock heads lower, it might find option support around the $90 strike, which acted as resistance back in August and September earlier this year.

If however the stock finds support around the $100 strike, then it will first encounter short term resistance around the $108 and $110 strikes where solid selling has emerged over the last two weeks.