Roku Options Bulls Emerge After Record High

Roku put buyers have been busier than usual in recent weeks

Aug 26, 2019 at 3:04 PM
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Roku Inc (NASDAQ:ROKU) stock is up 3.1% at $142.03 -- fresh off a record high of $145 -- after Barron's said "the best way to play streaming is turning out to be upstart Roku." Today's pop brings the equity's year-to-date gain to nearly 365%, and options traders think there's more upside in store for Roku in the near term.

Amid relatively average options volume today -- around 45,000 calls and 35,000 puts are on the tape -- speculators appear to be buying to open ROKU's weekly 8/30 145-strike call for a volume-weighted average price of $3.29. By doing so, they expect Roku shares to rally above breakeven at $148.29 (strike plus premium paid) by expiration at the close this Friday, Aug. 30.

More broadly speaking, it's been put buyers who have been busier than usual, relative to call buyers, in recent weeks. This is based on ROKU's 10-day put/call volume ratio of 0.81 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the elevated 89th annual percentile.

Echoing this is the security's Schaeffer's put/call open interest ratio (SOIR) of 1.12, which registers in the 83rd percentile of its 12-month range. In other words, options traders are more put-heavy than usual among contracts set to expire in three months or less.

Given ROKU stock's impressive rally this year, it's possible some of the recent put buying is a result of shareholders protecting paper profits with an options hedge. Whatever the reason, it's an attractive time to purchase premium on Roku options. The equity's 30-day at-the-money implied volatility of 54.8% arrives in the 17th annual percentile, pointing to relatively tame volatility expectations at the moment.

roku stock daily price chart aug 26


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