SoFi Joins Nvidia, Tesla, AMD in Most Active Options Amid Stock Rally: Options Chatter
$SoFi Technologies (SOFI.US)$’s options volume rose, landing the company just behind $Tesla (TSLA.US)$, $NVIDIA (NVDA.US)$, and $Advanced Micro Devices (AMD.US)$ in the ranking for the most active stock options as shares of the fintech firm extend their rally.
The stock of the fintech company advanced 6.8% to close at $28.14 Tuesday, extending its rally to more than 230% over the past 12 months, after Politico reported that the Trump administration is considering selling parts of its $1.6 trillion federal student loan portfolio. That could boost demand for refinancing offered by companies including SoFi, according to Bloomberg.
The share price rally bolstered the appeal of SoFi's call options. About 610,890 contracts changed hands Tuesday, almost double the 20-day average of 309,003 call options. Put options totaled 206,830 contracts, taking the put call ratio to 0.34, the lowest since mid-June.
Call options that give their holder the right to buy SoFi shares at $30 in 45 days attracted the heaviest trading as the stock rally bolstered the odds that the contract could be in the money by the time they expire in November.
SoFi shares have rallied as analysts boosted their price target on SoFi amid expectations that personal loan lenders could benefit from declining interest rates, making borrowing more affordable and increasing demand.
Demand for private student loans offered by companies including SoFi is seen rising just as the fintech firm is expanding its offerings, transforming itself to a comprehensive digital financial platform serving more than 10 million members.
“We favor SOFI’s transition to an integrated financial ecosystem spanning lending, banking, and investing, which creates powerful cross-selling opportunities,” CFRA analyst Caydee Blankenship wrote in a note last month, initiating coverage of the stock with a hold rating.
Amid the rally, the market is still bracing for bigger share price swings. SoFi’s implied volatility, which measures the market’s forecast of a stock’s potential price changes using variables including option premiums, rose to about 87% Tuesday, from 78% at the end of last week. That’s higher than the historical volatility which was seen at 46%.
Six analysts who covered SoFi have raised their price target on the stock over the past month, while 14 maintained theirs, according to Bloomberg data.
Last week, the company said its members who are approved for options trading will be able to access Options Level 1 strategies, including covered calls and cash-secured puts. The company has also set a roadmap that includes additional options levels and strategies, options trading in IRAs, and zero-day-to-expiration options.
“Though we do not expect options trading to be a material near-term revenue driver, we think this announcement is another encouraging sign of Mgmt’s commitment to product velocity and monetization, specifically within its Invest platform,” JPMorgan analysts including Reginald Smith, wrote in a note last week.
Disclaimer: Options trading entails significant risk and is not appropriate for all customers. It is important that investors read the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Opening new options positions close to or on their expiration date comes with substantial risk of losses for reasons that include potential volatility of the underlying security and limited time to expiration. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period. Certain complex option strategies carry additional risk, including potential losses that may exceed the original investment amount. If applicable, supporting documentation for any claims will be furnished upon request.
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Luzi Ann Santos
Moomoo Senior News and Community Manager
Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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webguybob : she's sofi ne.
ryu1192 : I am always calling you.
Thank you.
ryu1192 : Regarding SoFi, after reading the column, I purchased three shares and am now slightly in the positive.
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With limited experience and still much to learn in terms of knowledge and terminology, Mr. An's column is highly educational. It provides a broad perspective on current trends as well as insights into analyzing individual stock information.
I have often been told by doctors that it is remarkable how I have managed to live with such a multitude of rare diseases.
I look forward to your future columns with great anticipation.
I kindly request that you continue writing your columns without overexertion.