Options Alert: Will TeraWulf Keep Running?
TeraWulf has been rallying since last summer, and one big options trader may expect further gains.
This large transaction was detected yesterday in the company, which is morphing from a Bitcoin miner to an AI-infrastructure firm:
- 17,000 June 29 calls were purchased for $1.39.
- 17,000 June 31 calls were sold for $0.83.
Volume was below open interest in the 29s but not the 31s, which suggests the investor rolled a covered call position.
Here's how it works: Calls fix the level where a security can be purchased. They often gain value when stock prices rise. Investors can buy calls when they're looking for a rally. However they can also sell calls against shares they own. This strategy, known as a covered call, generates premium and can help mitigate risk.
Covered calls also limit upside. Yesterday's trader may have entered the session owning at least 1.7 million shares with a short position in the June 29 calls. He or she closed the 29s and sold the 31s. Making the adjustment would have cost $0.56 while raising their exit price by $2.
WULF rose 3.2 percent to $26.49 and is up more than 600 percent in the last year. The company started rallying in August after agreeing to lease computing space to Fluidstack, an AI firm backed by Alphabet (GOOGL). The move highlighted WULF's pivot from cryptocurrencies to high-performance computing (HPC).
Overall option volume in WULF was about average yesterday, according to TradeStation data. Calls accounted for 84 percent of the activity.
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