MongoDB Option Bears Emerge on FAANG Fears

MDB puts are popular on Amazon competition concerns

Andrea Kramer
Jan 10, 2019 at 1:19 PM
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The shares of MongoDB Inc (NASDAQ:MDB) are getting hammered today, after FAANG titan Amazon.com (AMZN) launched DocumentDB, its cloud-based database software. While MongoDB CEO Dev Ittycheria doesn't seem concerned about the competition, telling CNBC that "developers are savvy enough to distinguish between the real thing and a poor imitation," MDB options traders are betting on more downside for the shares.

MongoDB shares were last seen 10.5% lower to trade at $77.55, set for their worst day since Nov. 19. The equity is attempting to find a floor at its 100-day moving average, which has contained several pullbacks over the past year. From a longer-term perspective, MDB stock remains 169% higher year-over-year, and while many other equities were plumbing new lows in the fourth quarter, MDB touched a record high of $93.23 on Dec. 7.

MDB stock chart jan 10

So far today, MongoDB has seen roughly 3,300 puts cross the tape -- five times its average intraday pace, and on track for an annual high. Most of the action has transpired around the January 2019 80-strike put, where it seems buyers are picking up new pessimistic positions. The puts will move deeper into the money the further MDB stock retreats beneath $80 before the options expire on Friday, Jan. 18.

However, even though MDB has been a broad-market standout in the past three months -- prior to today, the security had outperformed the S&P 500 Index (SPX) by 43 percentage points in that time frame -- today's appetite for bearish bets is nothing new. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open more than two puts for every call in the past two weeks.

Meanwhile, Rosenblatt analysts said Amazon's new database is "more bark than bite," while BTIG analysts said "it may have only been a matter of time before AMZN made an overt 'gloves off' move." Currently, MDB boasts seven "buy" or better endorsements, compared to four "hold" or worse recommendations.


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