Market Insights

SoFi Technologies has been sliding despite positive news, and one big options trader could be looking for more downside.

This transaction was detected Tuesday afternoon in the fintech company:

• 20,000 March 22 puts were sold for $2.02.
• 10,000 March 20 puts were purchased for $1.07.

Volume was below open interest in the 22 puts but not the 20s, which suggests an existing position was closed and rolled to the lower strike.

Puts can gain value when prices fall because they fix the level where investors can sell securities.

Yesterday’s trader likely bought the March 22 puts at an early date and made money as the stock fell. He or she apparently took profits and rolled to the lower strike, cutting the number of contracts in half.

SoFi Technologies (SOFI), daily chart, with select patterns and indicators.

Making the adjustment would have generated a net credit of $2.97 million and kept the investor exposed to further downside.

SOFI fell 1.45 percent to $21.76 yesterday and is down 17 percent so far this year. The company reported better-than-expected earnings and revenue last Friday. It attempted to rally on the news, but sellers drove it lower in the first 90 minutes of trading.

The stock is now below its November low and 200-day moving average, which could be viewed as a longer-term breakdown.

Despite being a financial, SOFI has been viewed like a technology company because of its potentially disruptive growth model. That resulted in higher multiples, making it struggle recently along with industries like software.

Options trading is not suitable for all investors. Your TradeStation Securities’ account application to trade options will be considered and approved or disapproved based on all relevant factors, including your trading experience. See www.TradeStation.com/DisclosureOptions. Visit www.TradeStation.com/Pricing for full details on the costs and fees associated with options.

Margin trading involves risks, and it is important that you fully understand those risks before trading on margin. The Margin Disclosure Statement outlines many of those risks, including that you can lose more funds than you deposit in your margin account; your brokerage firm can force the sale of securities in your account; your brokerage firm can sell your securities without contacting you; and you are not entitled to an extension of time on a margin call. Review the Margin Disclosure Statement at www.TradeStation.com/DisclosureMargin.