Unusual Options Activity on OPEN
On August 26th, 2021, in the market capitalization-weighted index NASDAQ Global Select Market Composite (NasdaqGS), we saw unusual or noteworthy options trading volume and activity on Opendoor Technologies Inc. (OPEN), which closed Friday, September 3rd at $19.18.
There were 35,000 contracts traded on the $23 strike call option at the bid, dated for January 20th, 2023, representing 3,500,000 shares, or approximately $12,180,000 of premium. There were also an additional 35,000 contracts traded on the $15 strike call option at the ask, for the same date, representing another 3,500,000 shares, or approximately $21,070,000 of premium.
These orders come days after Opendoor Technologies said it priced its offering of $850 million of 0.25% convertible senior notes that mature in 2026 in a private offering.
Furthermore, real estate heavyweights are continuing to show their value, especially as Opendoor Technologies’ net income and EBITDA (earnings before interest, taxes, depreciation and amortization) both turned positive from negative results last quarter.
In fact, some tangential companies in the sector are showing as much as a $1.9 trillion market opportunity, such as Supernova Partners Acquisition.
If these orders were a strategy performed by the same entity, this would be a call debit spread, with a limited upside risk and a maximum loss of the debit paid, or in this case, $8,890,000. As of close on Friday, September 3rd, this position should represent a $1,610,000 profit. The maximum profit of this strategy would be the difference between the strikes minus the debit amount, or in this case, $19,110,000.
Considering this, OPEN’s average seven day call volume is 18,600; however, as seen below, on August 26th, 2021, there was significant betting as there were 73,847 calls traded, representing a 397% increase over the mean.
Additionally, per the chart below, representing OPEN’s price, in blue, since June 24th, 2021, there was 73,847 call volume, in green, on August 26th, 2021. Open interest, in yellow, has climbed to 427,208 as of Friday, September 3rd's close. Put volume, in red, has remained at a relative mean.
Unusual Dark Pool Volumes on OPEN
Alongside the unusual options activity detected by the Unusual Whales Flow, there were also noteworthy or significant dark pool volumes on Opendoor Technologies Inc. on several dates prior to this options activity.
Seen above, dark pool trades have been consistently buying at the ask or even above the ask in some cases (such as the $12,000,000 and $5,000,000 lots at the $16.71 and $14.72 spot prices, dated for the 26th and 18th of August, respectively). 37.9% of all dark pool orders have come in above the ask, or 22.1% at the ask, as compared to 6.1% below the bid, or 34% at the bid.
Seen above, the significant dark pool volume transpired primarily on August 18th, 2021, in the amount of 8,948,644 units traded; on September 3rd, 2021, there were 994,215 units traded.