{"id":62870,"date":"2025-01-09T03:00:08","date_gmt":"2025-01-09T08:00:08","guid":{"rendered":"https:\/\/www.tradestation.com\/insights\/?p=62870"},"modified":"2025-01-09T08:55:56","modified_gmt":"2025-01-09T13:55:56","slug":"options-alert-top-ai-stock","status":"publish","type":"post","link":"https:\/\/www.tradestation.com\/insights\/2025\/01\/09\/options-alert-top-ai-stock\/","title":{"rendered":"Options Alert: Trader May See a Top in AI Stock"},"content":{"rendered":"<p>C3.ai rallied in late 2024 on a mix of bullish news, but some options traders may think the AI software company is done going up.<\/p>\n<p>Check out this large transaction that appeared about 55 minutes after the opening bell on Wednesday:<\/p>\n<ul>\n<li>19,152 January 36 calls were sold for $0.60.<\/li>\n<li>19,152 January 39.50 calls were bought for $0.16.<\/li>\n<li>Volume was far above open interest in both strikes, which suggests new positions were initiated.<\/li>\n<\/ul>\n<p>At the same time, these similar blocks crossed the tape:<\/p>\n<ul>\n<li>19,152 10-January 37.50 calls traded for $0.04.<\/li>\n<li>19,152 10-January 41 calls were sold for $0.01.<\/li>\n<li>Volume was below open interest in both strikes. That could mean existing positions were closed.<\/li>\n<\/ul>\n<div id=\"attachment_62884\" style=\"width: 1034px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-62884\" class=\"wp-image-62884 size-large\" src=\"https:\/\/cdn.tradestation.com\/uploads\/sites\/2\/AI_20250108-1024x494.jpg\" alt=\"\" width=\"1024\" height=\"494\" srcset=\"https:\/\/cdn.tradestation.com\/uploads\/sites\/2\/AI_20250108-1024x494.jpg 1024w, https:\/\/cdn.tradestation.com\/uploads\/sites\/2\/AI_20250108-300x145.jpg 300w, https:\/\/cdn.tradestation.com\/uploads\/sites\/2\/AI_20250108-768x370.jpg 768w, https:\/\/cdn.tradestation.com\/uploads\/sites\/2\/AI_20250108-1536x741.jpg 1536w, https:\/\/cdn.tradestation.com\/uploads\/sites\/2\/AI_20250108-1080x521.jpg 1080w, https:\/\/cdn.tradestation.com\/uploads\/sites\/2\/AI_20250108.jpg 1920w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><p id=\"caption-attachment-62884\" class=\"wp-caption-text\"><em>C3.ai (AI) daily chart, showing key events and price levels.<\/em><\/p><\/div>\n<p>Such a combination of activity may suggest that an investor entered the session with a call credit spread, which can profit from a security remaining under a certain price. He or she apparently made money on the trade and rolled the position one week into the future.<\/p>\n<h2>Call Credit Spread<\/h2>\n<p>The old spread would have expired tomorrow and looked for AI to stay below $37.50. The trader closed it at a cost of $0.03.<\/p>\n<p>They collected $0.44 on the new spread, which expires next Friday, January 17. It looks for the share price to remain below $36.<\/p>\n<p>The transaction resulted in a net credit of $0.41.<\/p>\n<p><a href=\"https:\/\/www.tradestation.com\/insights\/2024\/05\/12\/the-basics-of-options\/\">Calls<\/a> fix the level where a security can be purchased. They can appreciate when stocks rally or expire worthless if prices fail to move.\u00a0In this case, the trader seemingly sold calls on the belief AI won&#8217;t rise sharply. <a href=\"https:\/\/www.tradestation.com\/insights\/2024\/07\/07\/options-trading-key-points-credit-spreads\/\">This article<\/a> has more information on credit spreads.<\/p>\n<p>AI dropped 7 percent to $33.30 yesterday. It was under $27 in mid-November before jumping on news Microsoft (MSFT) will include its software on the giant Azure cloud service. AI briefly crossed above $45 on December 10 and has faded since.<\/p>\n<p>The recent peak was below its earlier high in June 2023. That could make chart watchers think longer-term resistance is in place.<\/p>\n<p>Rolling the call spread accounted for almost half the total options volume in AI yesterday. Calls outnumbered puts by 6-to-1, according to TradeStation Data.<\/p>\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n<p><em>Options trading is not suitable for all investors. Your TradeStation Securities\u2019 account application to trade options will be considered and approved or disapproved based on all relevant factors, including your trading experience. See\u00a0<a href=\"https:\/\/www.theocc.com\/Company-Information\/Documents-and-Archives\/Options-Disclosure-Document\">www.TradeStation.com\/DisclosureOptions<\/a>. Visit\u00a0<a href=\"http:\/\/www.tradestation.com\/Pricing\">www.TradeStation.com\/Pricing<\/a>\u00a0for full details on the costs and fees associated with options.<\/em><\/p>\n<p><em>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\u00a0Margin Disclosure Statement at\u00a0<a href=\"https:\/\/uploads.tradestation.com\/uploads\/margin-disclosure-statement.pdf\">www.TradeStation.com\/DisclosureMargin<\/a>.<\/em><\/p>\n<div class=\"et_pb_section et_pb_section_4_tb_body article-content et_section_regular\">\n<div class=\"et_pb_row et_pb_row_4_tb_body\">\n<div class=\"et_pb_column et_pb_column_4_4 et_pb_column_9_tb_body et_pb_css_mix_blend_mode_passthrough et-last-child\">\n<div class=\"et_pb_module et_pb_post_content et_pb_post_content_0_tb_body\">\n<div class=\"et_pb_section et_pb_section_4_tb_body article-content et_section_regular\">\n<div class=\"et_pb_row et_pb_row_4_tb_body\">\n<div class=\"et_pb_column et_pb_column_4_4 et_pb_column_9_tb_body et_pb_css_mix_blend_mode_passthrough et-last-child\"><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>C3.ai rallied in late 2024 on a mix of bullish news, but some options traders may think the AI software company is done going up. Check out this large transaction that appeared about 55 minutes after the opening bell on Wednesday: 19,152 January 36 calls were sold for $0.60. 19,152 January 39.50 calls were bought [&hellip;]<\/p>\n","protected":false},"author":39,"featured_media":62873,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","inline_featured_image":false,"footnotes":""},"categories":[14,13,30],"tags":[1084,128],"class_list":["post-62870","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-options","category-stocks","category-technology","tag-ai","tag-msft","et-has-post-format-content","et_post_format-et-post-format-standard"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Options Alert: Trader May See a Top in AI Stock<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.tradestation.com\/insights\/2025\/01\/09\/options-alert-top-ai-stock\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Options Alert: Trader May See a Top in AI Stock\" \/>\n<meta property=\"og:description\" content=\"C3.ai rallied in late 2024 on a mix of bullish news, but some options traders may think the AI software company is done going up. 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