Market Insights

Blue Owl Capital has been skidding lower, and options traders could see more downside risk.

This large transaction was detected yesterday in the asset-management firm, known for actively financing data centers:

• 20,000 February 15 puts traded for $4.20.
• 35,000 April 13 puts traded for $2.40.

Both blocks crossed at exactly the same time and were far bigger than any other transactions. Volume was below open interest in the February 15s but not the April 13s. Those points suggest an existing position was closed and rolled to the lower strike.

Puts fix the price where a security can be sold. They often appreciate when stocks lose value, which may have been the case with Thursday’s activity.

The trader could have entered the session with profits in the February 15s. He or she may have sold the contracts to avoid assignment next Friday, February 20, and moved two months into the future.

Making the adjustment would have cost roughly nothing given the different prices and sizes. However, downside leverage would increase because the number of puts nearly doubled.

Blue Owl (OWL), daily chart, with select patterns and indicators.

OWL fell 3.6 percent to $11.63 yesterday despite earnings and revenue beating estimates. The company has lost about half its value in the past year as investors worry a potential slowdown in AI investment could hurt business.

While not usually an active underlier, options volume has surged in OWL recently as AI worries spread. Puts have driven most of the increase and accounted for 82 percent of the total yesterday, according to TradeStation data.

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