South Korea's Crypto Crackdown Sends 2 Bitcoin Stocks Lower

Cyrptocurrencies have had a volatile week

Patrick Martin
Dec 28, 2017 at 9:56 AM
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It could be another tough day for bitcoin. For the past week, the enigmatic cryptocurrency has seesawed between sharp drops and rapid recoveries. Today, crypto-related stocks Riot Blockchain Inc (NASDAQ:RIOT) and Overstock.com Inc (NASDAQ:OSTK) are lower due to news the South Korean government is working to regulate bitcoin trading. 

Options Bears Eyeing RIOT Stock

The new curbs on crypto trading in South Korea have Riot Blockchain down 6% to trade at $28. The former biotech name has surged since pivoting to investing in bitcoin mining machines. However, RIOT stock has pulled back sharply since touching a high of $46.20 on Dec. 19. 

Options traders have been clamoring for RIOT. Total open interest of 140,605 contracts is an annual high. Digging deeper, the weekly 12/29 25-strike put is home to peak open interest of 4,247 contracts. According to data from the major options exchanges, most of the activity here has been of the buy-to-open kind, indicating options traders are expecting another dip in the coming days.

OSTK A Favorite Among Short Sellers

Overstock.com is down 3.2% to trade at $66.03. After a well-publicized pivot to blockchain, the equity exploded, more than quadrupling in the last six months. OSTK reached a record high of $82.70 on Dec. 19, and has outperformed the broader S&P 500 Index (SPX) by more than 51 percentage points during the last two months. 

Nevertheless, short sellers continue to pile on. Short interest increased by 42% during the last two reporting periods to a decade-plus high of 7.32 million shares. This represents a whopping 67% of OSTK's total available float.


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