Red-Hot Roku Stock Sparks Explosive Options Volume

Funai Electric will start including the streaming service on its Philips-branded smart TVs

Nov 13, 2017 at 2:25 PM
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Roku Inc (NASDAQ:ROKU) has been on fire since its late-September initial public offering (IPO). This breakout price action is continuing today, with the shares up 35.1% to trade at $44.86 -- earlier hitting a record high of $47.49 -- on news Japan-based Funai Electric will start including the streaming service in its Philips-branded smart TVs. The surge has sparked a flood of options activity, too, with roughly 63,000 contracts traded so far, nine times what's typically seen at this point in the day.

More specifically, 29,944 calls and 34,035 puts are on the tape. While call volume is within striking distance of its all-time peak of 43,940 contracts traded in a single session -- set last Thursday -- put volume is at its highest perch to date.

Front-month contracts are in high demand, too, accounting for nine of ROKU's 10 most active options. Most active is the November 45 call, where 7,092 contracts have traded -- and there looks to be a mix of buy- and sell-to-open activity occurring. Those purchasing the calls expect ROKU to rally back above $45 by expiration at this Friday's close, while those writing the calls think the strike will serve as a short-term ceiling.

This penchant for front-month strikes echoes a wider theme, considering standard November options make up five of Roku's top 10 open interest positions. In the lead are the November 30 put and call, which house a collective 4,750 contracts. Data from Trade-Alert points to a combination of buying and selling at the put, while the bulk of the activity at the call appears to be of the long variety.

Looking at the charts, Roku stock is comfortably on track for its third consecutive double-digit percentage gain -- thanks in part to last week's well-received earnings report. In fact, since their Nov. 8 close at $18.84, the shares have surged more than 126%. Longer term, the stock priced its IPO at $14, only to open at $15.78 on Sept. 29. ROKU went on to hit its record low of $15.75 on that first day of trading, eventually closing at its session peak of $23.50.

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