2 Crypto Stocks Sitting Out the Sell-Off

RIOT and MARA stocks are higher with bitcoin

May 13, 2019 at 2:00 PM
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While most stocks are swimming in red ink due to the escalating U.S.-China tariff war, blockchain-related stocks are bucking the trend to trade higher. More specifically, a big rebound in bitcoin has lifted penny stocks Marathon Patent Group Inc (NASDAQ:MARA) and Riot Blockchain Inc (NASDAQ:RIOT), and option bulls are speculating on even more upside for the shares.

Marathon Patent stock was last seen up 23.9% at $3.62. The shares have stair-stepped higher since bottoming at $1.32 in late January, doubling in that time frame. More recently, MARA has struggled to conquer the $3.75-$4 region, which has put a lid on rally attempts since mid-April.

MARA stock chart may 13

So far today, the equity has seen over 900 call options change hands -- eight times its average intraday call volume. That's compared to fewer than 50 MARA puts exchanged so far.

Most active are the June and December 5 calls, which have both seen suspected buy-to-open activity. By purchasing the calls to open, the buyers expect MARA stock to skyrocket north of $5 by the options' respective expiration dates of June 21 and Dec. 20.

With earnings out of the way -- Marathon Patent reported last Friday, May 10 -- now is an opportune time to scoop up near-term MARA options at a relative discount. The security's Schaeffer's Volatility Index (SVI) landed at 164% this morning, in just the 16th percentile of its annual range, pointing to relatively modest volatility expectations being priced into short-term MARA options contracts.

Meanwhile, Riot Blockchain stock was last seen 18.3% higher at $4.78. RIOT shares more than quadrupled from their Dec. 26 low of $1.29 to their recent peak of $6.14 on April 23. However, after that year-to-date high, RIOT backpedaled to test -- and bounce off -- support from its 200-day moving average.

RIOT stock chart may 13

RIOT has seen roughly 12,000 calls change hands today -- more than double the norm, and almost triple the number of puts exchanged. Most active is the May 5 call, where more than 3,890 contracts have traded. It looks like buyers are picking up the calls to open, with hopes of RIOT shares toppling $5 by the close this Friday, May 17, when front-month options expire.

However, some of that call buying could be attributable to shorts seeking a near-term hedge. Short interest on RIOT accounts for nearly 29% of the stock's total available float.


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