U.S. Global Investors Options Traders Bet on Bigger Bitcoin Gains

GROW stock topped out at a five-year high earlier

Nov 27, 2017 at 2:35 PM
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Shares of U.S. Global Investors, Inc. (NASDAQ:GROW) have been soaring in recent sessions. Today, the shares are up 20.5% at $5.92, fresh off a five-year high of $6.90, after the investment company's CEO Frank Holmes waxed optimistic on bitcoin and cryptocurrency to CNBC. And earlier this month, the company reported strong earnings, thanks to a strategic investment in HIVE Blockchain Technologies, which Holmes was recently named non-executive chair. Against this backdrop, GROW options volume is surging.

At last check, 2,977 calls and 625 puts had traded on GROW stock -- 12 times what's typically seen at this point in the day, and volume at a 12-month high across the board. Echoing this, the equity's 30-day at-the-money implied volatility has spiked 4.6% to 216.8%, pacing in the 99th annual percentile, after hitting a 52-week peak earlier.

While some traders may be selling to close their now in-the-money December 5 calls -- GROW's most active option so far -- other speculators could be purchasing new positions at the December 7.50 call. If this is the case, the goal is for U.S. Global Investors to topple the $7.50 mark by front-month options expiration at the close on Friday, Dec. 15.

It's certainly possible these new call buyers are vanilla options traders expecting a bigger breakout for GROW stock, especially as bitcoin hits record highs. However, it's also plausible that short sellers are initiating options hedges to protect their bearish bets against any additional upside risk, considering short interest more than doubled in the latest reporting period.

Looking at the charts, GROW was trading near $1.50 as recently as mid-September. Last week alone, the shares nearly doubled in value, with U.S. Global Investors now boasting a 124.5% month-to-date gain.

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