Options Traders Pile on as Affirm Stock Bucks Bear Note

AFRM is taking broader market cues today

Deputy Editor
Dec 13, 2022 at 10:04 AM
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The shares of buy-now-pay-later (BNPL) concern Affirm Holdings Inc (NASDAQ:AFRM) are surging alongside the broader market, brushing off a bear note from Bank of America Securities, who downgraded AFRM to "neutral" from "buy," citing "sticky" negative sentiment. The analyst fears that Affirm's credit risk and discretionary spending cutbacks could be around for several more quarters.

Despite this, Affirm stock was last seen up 9.6% to trade at $13.45, as the upbeat inflation reading jolts U.S. equities awake. The shares' are now facing off with their 20-day moving average, a trendline that's weighed since early November. In the last 12 months, the security has shed 89.3%.

Options traders could be calling a bottom for AFRM, with 12,000 calls -- double the intraday average volume -- already crossing the tape today. Most popular by far is the weekly 12/30 13.50-strike put, followed by the December 12.50 call.

This is a shift from the longer-term sentiment in the options pits. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AFRM's 50-day put/call volume ratio of 2.81 sits higher than 94% of readings from the past year, which indicates a healthy appetite for puts over the last 10 weeks.

Options are certainly an intriguing route, per the security's Schaeffer's Volatility Scorecard (SVS) sits at a relatively high 75 out of 100, this means Affirm stock has exceeded option traders' volatility expectations during the past year.


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